UK income tax on UK dividends for non-resident

[partington]

My understanding is that the 10% dividend tax at source will continue and no one will be able to reclaim it (ie no change).

This is not the case. The notional 10% dividend tax WAS formerly available to be reclaimed by UK residents: this 10% notional tax has been completely abolished (that is, not any longer available to be used as a tax credit by UK residents) and has been replaced by the new tax free dividend allowance, and the new dividend tax bands.

This has been very clearly stated, not least on the UK HMRC site: https://www.gov.uk/government/publications/dividend-allowance-factsheet/dividend-allowance-factsheet

"From April 2016 the Dividend Tax Credit will be replaced by a new tax-free Dividend Allowance.The Dividend Allowance means that you won’t have to pay tax on the first £5,000 of your dividend income, no matter what non-dividend income you have.The allowance is available to anyone who has dividend income.Headline rates of dividend tax are also changing. You’ll pay tax on any dividends you receive over £5,000 at the following rates:

• 7.5% on dividend income within the basic rate band
• 32.5% on dividend income within the higher rate band
• 38.1% on dividend income within the additional rate band

This simpler system will mean that only those with significant dividend income will pay more tax.If you’re an investor with modest income from shares, you’ll see either a tax cut or no change in the amount of tax you owe."

[chiang mai]

I believe the relevant term for taxation purposes is "domecile" rather than "residence".

Each country has its own rules to governing domecile.

The US' rule is easy; every US citizen is considered domeciled in the US no matter where they live or for how long.

European countries' rules are typically different, and the UK's rules are likely rather complicated as that's how they like to do things.

So I think it's a matter of decoding those rules, potentially with the assistance of a UK tax lawyer.

Domicile is largely irrelevant to the issue, the key issue is residency. A person can be resident in the UK but domiciled elsewhere and they are still liable to tax on income that arise in the UK.

[KittenKong]

My understanding is that the 10% dividend tax at source will continue and no one will be able to reclaim it (ie no change).

This is not the case. The notional 10% dividend tax WAS formerly available to be reclaimed by UK residents: this 10% notional tax has been completely abolished (that is, not any longer available to be used as a tax credit by UK residents) and has been replaced by the new tax free dividend allowance, and the new dividend tax bands.

This has been very clearly stated, not least on the UK HMRC site: https://www.gov.uk/government/publications/dividend-allowance-factsheet/dividend-allowance-factsheet

"From April 2016 the Dividend Tax Credit will be replaced by a new tax-free Dividend Allowance.The Dividend Allowance means that you won’t have to pay tax on the first £5,000 of your dividend income, no matter what non-dividend income you have.The allowance is available to anyone who has dividend income.Headline rates of dividend tax are also changing. You’ll pay tax on any dividends you receive over £5,000 at the following rates:

• 7.5% on dividend income within the basic rate band
• 32.5% on dividend income within the higher rate band
• 38.1% on dividend income within the additional rate band

This simpler system will mean that only those with significant dividend income will pay more tax.If you’re an investor with modest income from shares, you’ll see either a tax cut or no change in the amount of tax you owe."

The possibility of reclaiming the tax credit was abolished for all and sundry by Gordon Brown years ago, as I mentioned.

The tax credit itself is now also going to be abolished, and will be replaced by a tax-free allowance.

But the tax at source itself will remain. The only change is that there will be no tax credit given for it, just a new tax-free allowance.

So I dont think that non-residents need worry about suddenly getting 10% more in dividends.

If I'm proved wrong I will be the first to denounce myself as a prat, and I will be more than happy to do so.

[partington]

My understanding is that the 10% dividend tax at source will continue and no one will be able to reclaim it (ie no change).

This is not the case. The notional 10% dividend tax WAS formerly available to be reclaimed by UK residents: this 10% notional tax has been completely abolished (that is, not any longer available to be used as a tax credit by UK residents) and has been replaced by the new tax free dividend allowance, and the new dividend tax bands.

This has been very clearly stated, not least on the UK HMRC site: https://www.gov.uk/government/publications/dividend-allowance-factsheet/dividend-allowance-factsheet

"From April 2016 the Dividend Tax Credit will be replaced by a new tax-free Dividend Allowance.The Dividend Allowance means that you won’t have to pay tax on the first £5,000 of your dividend income, no matter what non-dividend income you have.The allowance is available to anyone who has dividend income.Headline rates of dividend tax are also changing. You’ll pay tax on any dividends you receive over £5,000 at the following rates:

• 7.5% on dividend income within the basic rate band
• 32.5% on dividend income within the higher rate band
• 38.1% on dividend income within the additional rate band

This simpler system will mean that only those with significant dividend income will pay more tax.If you’re an investor with modest income from shares, you’ll see either a tax cut or no change in the amount of tax you owe."

The possibility of reclaiming the tax credit was abolished for all and sundry by Gordon Brown years ago, as I mentioned.

The tax credit itself is now also going to be abolished, and will be replaced by a tax-free allowance.

But the tax at source itself will remain. The only change is that there will be no tax credit given for it, just a new tax-free allowance.

So I dont think that non-residents need worry about suddenly getting 10% more in dividends.

If I'm proved wrong I will be the first to denounce myself as a prat, and I will be more than happy to do so.

To be honest I have no idea if you are correct or not.

From lack of knowledge, but common sense only, if this tax credit had been eliminated by Gordon Brown, then it would seem superfluous to eliminate it again in the 2016 legislation.

I assumed that previously, that is up until April 2016, higher rate taxpayers who would have been liable to a tax rate of 35% on dividend income would actually owe only 25% because of the notional 10% tax credit.

But I have to admit I'm not certain at all this applies for the last few years, I just know it did once!

[KittenKong]

The possibility of reclaiming the tax credit was abolished for all and sundry by Gordon Brown years ago, as I mentioned.

The tax credit itself is now also going to be abolished, and will be replaced by a tax-free allowance.

But the tax at source itself will remain. The only change is that there will be no tax credit given for it, just a new tax-free allowance.

So I dont think that non-residents need worry about suddenly getting 10% more in dividends.

If I'm proved wrong I will be the first to denounce myself as a prat, and I will be more than happy to do so.

To be honest I have no idea if you are correct or not.

From lack of knowledge, but common sense only, if this tax credit had been eliminated by Gordon Brown, then it would seem superfluous to eliminate it again in the 2016 legislation.

I assumed that previously, that is up until April 2016, higher rate taxpayers who would have been liable to a tax rate of 35% on dividend income would actually owe only 25% because of the notional 10% tax credit.

But I have to admit I'm not certain at all this applies for the last few years, I just know it did once!

Gordon Brown did not eliminate the tax credit: he just eliminated the possibility of reclaiming it. Since his actions the tax has been levied on everyone (including pension funds) and a credit has been given, which could not be reclaimed by anyone (again including pension funds) but did show that the basic rate of tax had already been paid. So anyone at basic-rate tax level or lower would have nothing extra to pay, but could never claim back what they had already paid regardless of how little they earned. So much for widows and orphans.

As you say, those who earn more would have been subject to an extra tax on dividend income over and above the amount of the credit, and the principle of this is not changing (though the rates are).

What is changing now is that the credit will disappear (but not the tax behind the credit) and that instead an allowance will be given to residents below which no more tax will be due. Any resident with dividend income above the allowance will get an extra tax bill, as before. (Bank interest will be treated in a similar way: paid gross with an allowance - that will cover 95% of all savers - and tax will be due from those who exceed that allowance.)

As I see it, for non-residents with no other UK taxable income there will be no change regarding tax on dividends as the total tax due will continue to be limited to that taken at source, which they have not been able to reclaim for many years. ie They will receive their dividends normally with a tax deduction that they wont even be aware of, and they will have nothing extra to pay. They will also have no extra tax to pay on deposit interest in the same way.

Also as I see it (though I'm not in this group and so dont pay very much attention to it) non-residents with other taxable UK income will get the benefit of all the usual resident's allowances (including the new dividend allowance and the new savings interest allowance) and will pay tax on earnings above those allowances, just like residents.

Non-residents will continue to benefit from complete exemption from CGT on shares, though no longer on property.

[myprivate]

"They will receive their dividends normally with a tax deduction that they wont even be aware of, and they will have nothing extra to pay."

So when an investment trust website quotes a dividend yield of 5% is that before or after the tax is deducted?

[KittenKong]

"They will receive their dividends normally with a tax deduction that they wont even be aware of, and they will have nothing extra to pay."

So when an investment trust website quotes a dividend yield of 5% is that before or after the tax is deducted?

After. Always after. No one can escape this tax and it has not been possible to reclaim it for many years. It has no more direct effect on those receiving dividends than corporation tax does (in fact it really is just corporation tax). So best just forget about it.

Of course the dividend you receive from the investment trust may be subject to extra tax if you are resident and exceed your allowance, or if you are non-resident with other income and also exceed your allowance.

[myprivate]

"They will receive their dividends normally with a tax deduction that they wont even be aware of, and they will have nothing extra to pay."

So when an investment trust website quotes a dividend yield of 5% is that before or after the tax is deducted?

After. Always after. No one can escape this tax and it has not been possible to reclaim it for many years. It has no more direct effect on those receiving dividends than corporation tax does (in fact it really is just corporation tax). So best just forget about it.

Of course the dividend you receive from the investment trust may be subject to extra tax if you are resident and exceed your allowance, or if you are non-resident with other income and also exceed your allowance.

Good news, thanks.

[salavan]

I am 58 years old and pretty much retired. I am thinking of going back to the UK and declaring residence again sometime before my 65th. birthday. For obvious reasons nods as good as a wink they say. Although my real intention is to live in Thailand most of the year. I do know about the 183 day rule but do they really enforce that. I would suppose they are more interested about people who are not out of the country long enough and therefore cannot claim the tax relief which comes with being Non Resident.

Also what sort of reporting do you have to do before pension age if you are living in the UK. Is it mandatory e.g. that you sign on the dole etc.

Den

hi den im also thinking about doing the same as you im just wondering if HMRC will start checking peoples passports to see if they actually are resident or whether this is automatic when you leave or enter the uk, on another note i dont think there will be much tax relief in the future which comes with being non resident not with Cameron and Osborn in goverment

[KittenKong]

hi den im also thinking about doing the same as you im just wondering if HMRC will start checking peoples passports to see if they actually are resident or whether this is automatic when you leave or enter the uk, .....

Governments already know when you enter and leave the country (unless you do so surreptitiously). They scan your passport and they also get electronic information from airlines.

Quite what they do with that info is another matter. But whatever they do with it now I expect them to do more in the future.

[fletchsmile]

The possibility of reclaiming the tax credit was abolished for all and sundry by Gordon Brown years ago, as I mentioned.

The tax credit itself is now also going to be abolished, and will be replaced by a tax-free allowance.

But the tax at source itself will remain. The only change is that there will be no tax credit given for it, just a new tax-free allowance.

So I dont think that non-residents need worry about suddenly getting 10% more in dividends.

If I'm proved wrong I will be the first to denounce myself as a prat, and I will be more than happy to do so.

To be honest I have no idea if you are correct or not.

From lack of knowledge, but common sense only, if this tax credit had been eliminated by Gordon Brown, then it would seem superfluous to eliminate it again in the 2016 legislation.

I assumed that previously, that is up until April 2016, higher rate taxpayers who would have been liable to a tax rate of 35% on dividend income would actually owe only 25% because of the notional 10% tax credit.

But I have to admit I'm not certain at all this applies for the last few years, I just know it did once!

Gordon Brown did not eliminate the tax credit: he just eliminated the possibility of reclaiming it. Since his actions the tax has been levied on everyone (including pension funds) and a credit has been given, which could not be reclaimed by anyone (again including pension funds) but did show that the basic rate of tax had already been paid. So anyone at basic-rate tax level or lower would have nothing extra to pay, but could never claim back what they had already paid regardless of how little they earned. So much for widows and orphans.

..

Yes Gordon Brown stopped you claiming the tax credit back on most. There was one small exception and that was corporate bonds. You can still claim back the tax credit on some of these. I've a couple of corporate bond funds within an ISA, and my provider automatically claims the tax credit back on these for me

[ArranP]

Thanks to Partington for post #17.

To add to the discussion, the 'accounting web uk' site had this:-

Disregarded income

santisuk | Fri, 23/10/2015 - 10:11 | Permalink

As Steve Kesby says, non-residents are effectively not liable to UK tax beyond the amount amount of any tax deducted at source (on dividend and other savings income only). Regarding dividend income, previously - and still in the current tax year - 10% tax was/is deducted at source by companies paying dividends, but that requirement to deduct tax at source placed on companies will be withdrawn with effect from 6 April 2016 as part of taxation on dividend income reform.

If the government does not introduce some special additional provision to replace that tax deduction at source for non-residents then it would seem that non-residents will in future be able to make investments via the UK and receive their UK dividend income gross with no further UK tax to pay. For those who have left the UK and have formally acquired non-resident status but still invest through the UK this is seemingly a significant gimme by the UK government. For instance this year I will suffer about GBP 7,000 of UK dividend tax deducted at source and for 2016/17 seemingly the equivalent amount will be zero. I live in a country (Thailand) which does not tax investment income earned abroad!

I am suspicious of a gimme like that. Has anyone heard of anything in the pipeline that might reinstate the government's tax-take on such income for NRIs. Anything in the Finance Bill that presumably is approaching finalisation or has recently been finalised (if the same timetable is adopted as when I was in practice)? I wait with bated breath!

For completeness I will note that:

1.Disregarded income for NRIs also includes savings interest income. I assume that banks and others will still be deducting tax at source on UK taxpayers so nothing changes on the tax position for that stream of income

2. Disregarded income is advantageous for those NRIs who have significant levels of UK dividend and/or other savings income. However you are not permitted a UK personal allowance if you go the disregarded income route. Accordingly for smaller amounts of dividend and/or other savings interest it is better to be fully taxed on such income (especially so now that there is to be a tax-free allowance on the first GBP 5,000 of dividend income next year) and claim the personal allowance.

HMRC will automatically select which route is beneficial for the NRI taxpayer (disregarded income or personal allowance) when a return is submitted, but obviously it helps to know how your tax is being computed.

As a UK landlord who will be UK non-resident living in Thailand. I own some UK property as an individual and some UK property as UK ltd co which I am the director and 100% shareholder.

The money I receive from properties I own individually is taxed by HMRC as UK income, the money I receive from the UK ltd co is by way of dividend which my UK ltd co pays corporation tax to HMRC on at 20%.

As a non-resident living in Thailand, I have the following assumptions / questions:

1) I understand that I do not have a tax liability to HMRC for the dividends my UK ltd co pays to me, i.e. I do not have to pay dividend tax to HMRC for the dividends awarded to my by my UK ltd co.

2) Do I have to declare my UK dividend income to Thailand ?

3) Do I have any tax liability to Thailand for the dividends my UK ltd co pays to me ? The post above seems to say that Thailand does not charge dividend tax on dividends received from UK companies.

Thank you for your advice.

Edited February 1, 2016 by ArranP

[Jip99]

I am 58 years old and pretty much retired. I am thinking of going back to the UK and declaring residence again sometime before my 65th. birthday. For obvious reasons nods as good as a wink they say. Although my real intention is to live in Thailand most of the year. I do know about the 183 day rule but do they really enforce that. I would suppose they are more interested about people who are not out of the country long enough and therefore cannot claim the tax relief which comes with being Non Resident.

Also what sort of reporting do you have to do before pension age if you are living in the UK. Is it mandatory e.g. that you sign on the dole etc.

Den

I suspect that you will have until your 66th birthday.

[topt]

I am 58 years old and pretty much retired. I am thinking of going back to the UK and declaring residence again sometime before my 65th. birthday. For obvious reasons nods as good as a wink they say. Although my real intention is to live in Thailand most of the year. I do know about the 183 day rule but do they really enforce that. I would suppose they are more interested about people who are not out of the country long enough and therefore cannot claim the tax relief which comes with being Non Resident.

Also what sort of reporting do you have to do before pension age if you are living in the UK. Is it mandatory e.g. that you sign on the dole etc.

Den

I suspect that you will have until your 66th birthday.

Denby45 -

Also what sort of reporting do you have to do before pension age if you are living in the UK. Is it mandatory e.g. that you sign on the dole etc.

No - makes the unemployed numbers look better and they don't have to pay any benefits.

[topt]

Thanks to Partington for post #17.

To add to the discussion, the 'accounting web uk' site had this:-

Disregarded income

santisuk | Fri, 23/10/2015 - 10:11 | Permalink

As Steve Kesby says, non-residents are effectively not liable to UK tax beyond the amount amount of any tax deducted at source (on dividend and other savings income only). Regarding dividend income, previously - and still in the current tax year - 10% tax was/is deducted at source by companies paying dividends, but that requirement to deduct tax at source placed on companies will be withdrawn with effect from 6 April 2016 as part of taxation on dividend income reform.

If the government does not introduce some special additional provision to replace that tax deduction at source for non-residents then it would seem that non-residents will in future be able to make investments via the UK and receive their UK dividend income gross with no further UK tax to pay. For those who have left the UK and have formally acquired non-resident status but still invest through the UK this is seemingly a significant gimme by the UK government. For instance this year I will suffer about GBP 7,000 of UK dividend tax deducted at source and for 2016/17 seemingly the equivalent amount will be zero. I live in a country (Thailand) which does not tax investment income earned abroad!

I am suspicious of a gimme like that. Has anyone heard of anything in the pipeline that might reinstate the government's tax-take on such income for NRIs. Anything in the Finance Bill that presumably is approaching finalisation or has recently been finalised (if the same timetable is adopted as when I was in practice)? I wait with bated breath!

For completeness I will note that:

1.Disregarded income for NRIs also includes savings interest income. I assume that banks and others will still be deducting tax at source on UK taxpayers so nothing changes on the tax position for that stream of income

2. Disregarded income is advantageous for those NRIs who have significant levels of UK dividend and/or other savings income. However you are not permitted a UK personal allowance if you go the disregarded income route. Accordingly for smaller amounts of dividend and/or other savings interest it is better to be fully taxed on such income (especially so now that there is to be a tax-free allowance on the first GBP 5,000 of dividend income next year) and claim the personal allowance.

HMRC will automatically select which route is beneficial for the NRI taxpayer (disregarded income or personal allowance) when a return is submitted, but obviously it helps to know how your tax is being computed.

As a UK landlord who will be UK non-resident living in Thailand. I own some UK property as an individual and some UK property as UK ltd co which I am the director and 100% shareholder.

The money I receive from properties I own individually is taxed by HMRC as UK income, the money I receive from the UK ltd co is by way of dividend which my UK ltd co pays corporation tax to HMRC on at 20%.

As a non-resident living in Thailand, I have the following assumptions / questions:

1) I understand that I do not have a tax liability to HMRC for the dividends my UK ltd co pays to me, i.e. I do not have to pay dividend tax to HMRC for the dividends awarded to my by my UK ltd co.

2) Do I have to declare my UK dividend income to Thailand ?

3) Do I have any tax liability to Thailand for the dividends my UK ltd co pays to me ? The post above seems to say that Thailand does not charge dividend tax on dividends received from UK companies.

Thank you for your advice.

It has been discussed on here previously and generally accepted that Thailand does not tax money brought in as long as it is not in the year it has been earned/paid. However how would they actually be able to discern when something was earned and more to the point why would most people you even consider declaring it especially as the Thai revenue collectors do not seem that interested...........

As long as you are golden with HMRC I would suggest do nothing

[ArranP]

Thanks to Partington for post #17.

To add to the discussion, the 'accounting web uk' site had this:-

Disregarded income

santisuk | Fri, 23/10/2015 - 10:11 | Permalink

As Steve Kesby says, non-residents are effectively not liable to UK tax beyond the amount amount of any tax deducted at source (on dividend and other savings income only). Regarding dividend income, previously - and still in the current tax year - 10% tax was/is deducted at source by companies paying dividends, but that requirement to deduct tax at source placed on companies will be withdrawn with effect from 6 April 2016 as part of taxation on dividend income reform.

If the government does not introduce some special additional provision to replace that tax deduction at source for non-residents then it would seem that non-residents will in future be able to make investments via the UK and receive their UK dividend income gross with no further UK tax to pay. For those who have left the UK and have formally acquired non-resident status but still invest through the UK this is seemingly a significant gimme by the UK government. For instance this year I will suffer about GBP 7,000 of UK dividend tax deducted at source and for 2016/17 seemingly the equivalent amount will be zero. I live in a country (Thailand) which does not tax investment income earned abroad!

I am suspicious of a gimme like that. Has anyone heard of anything in the pipeline that might reinstate the government's tax-take on such income for NRIs. Anything in the Finance Bill that presumably is approaching finalisation or has recently been finalised (if the same timetable is adopted as when I was in practice)? I wait with bated breath!

For completeness I will note that:

1.Disregarded income for NRIs also includes savings interest income. I assume that banks and others will still be deducting tax at source on UK taxpayers so nothing changes on the tax position for that stream of income

2. Disregarded income is advantageous for those NRIs who have significant levels of UK dividend and/or other savings income. However you are not permitted a UK personal allowance if you go the disregarded income route. Accordingly for smaller amounts of dividend and/or other savings interest it is better to be fully taxed on such income (especially so now that there is to be a tax-free allowance on the first GBP 5,000 of dividend income next year) and claim the personal allowance.

HMRC will automatically select which route is beneficial for the NRI taxpayer (disregarded income or personal allowance) when a return is submitted, but obviously it helps to know how your tax is being computed.

As a UK landlord who will be UK non-resident living in Thailand. I own some UK property as an individual and some UK property as UK ltd co which I am the director and 100% shareholder.

The money I receive from properties I own individually is taxed by HMRC as UK income, the money I receive from the UK ltd co is by way of dividend which my UK ltd co pays corporation tax to HMRC on at 20%.

As a non-resident living in Thailand, I have the following assumptions / questions:

1) I understand that I do not have a tax liability to HMRC for the dividends my UK ltd co pays to me, i.e. I do not have to pay dividend tax to HMRC for the dividends awarded to my by my UK ltd co.

2) Do I have to declare my UK dividend income to Thailand ?

3) Do I have any tax liability to Thailand for the dividends my UK ltd co pays to me ? The post above seems to say that Thailand does not charge dividend tax on dividends received from UK companies.

Thank you for your advice.

It has been discussed on here previously and generally accepted that Thailand does not tax money brought in as long as it is not in the year it has been earned/paid. However how would they actually be able to discern when something was earned and more to the point why would most people you even consider declaring it especially as the Thai revenue collectors do not seem that interested...........

As long as you are golden with HMRC I would suggest do nothing

I've been subject to several compliance checks by HMRC already. If at some point in the future, I am subject to another, HMRC will, I am sure, ask for the receipts to show taxes paid to Thailand on the dividends I have received from my UK ltd co.

What are the rates charged by Thailand on dividend income brought into Thailand during the same year it has been earned ?

When you say "same year", is it same calendar year or same tax year? when do the tax years run from / to ?

Edited February 1, 2016 by ArranP

[topt]

Thanks to Partington for post #17.

To add to the discussion, the 'accounting web uk' site had this:-

Disregarded income

santisuk | Fri, 23/10/2015 - 10:11 | Permalink

As Steve Kesby says, non-residents are effectively not liable to UK tax beyond the amount amount of any tax deducted at source (on dividend and other savings income only). Regarding dividend income, previously - and still in the current tax year - 10% tax was/is deducted at source by companies paying dividends, but that requirement to deduct tax at source placed on companies will be withdrawn with effect from 6 April 2016 as part of taxation on dividend income reform.

If the government does not introduce some special additional provision to replace that tax deduction at source for non-residents then it would seem that non-residents will in future be able to make investments via the UK and receive their UK dividend income gross with no further UK tax to pay. For those who have left the UK and have formally acquired non-resident status but still invest through the UK this is seemingly a significant gimme by the UK government. For instance this year I will suffer about GBP 7,000 of UK dividend tax deducted at source and for 2016/17 seemingly the equivalent amount will be zero. I live in a country (Thailand) which does not tax investment income earned abroad!

I am suspicious of a gimme like that. Has anyone heard of anything in the pipeline that might reinstate the government's tax-take on such income for NRIs. Anything in the Finance Bill that presumably is approaching finalisation or has recently been finalised (if the same timetable is adopted as when I was in practice)? I wait with bated breath!

For completeness I will note that:

1.Disregarded income for NRIs also includes savings interest income. I assume that banks and others will still be deducting tax at source on UK taxpayers so nothing changes on the tax position for that stream of income

2. Disregarded income is advantageous for those NRIs who have significant levels of UK dividend and/or other savings income. However you are not permitted a UK personal allowance if you go the disregarded income route. Accordingly for smaller amounts of dividend and/or other savings interest it is better to be fully taxed on such income (especially so now that there is to be a tax-free allowance on the first GBP 5,000 of dividend income next year) and claim the personal allowance.

HMRC will automatically select which route is beneficial for the NRI taxpayer (disregarded income or personal allowance) when a return is submitted, but obviously it helps to know how your tax is being computed.

As a UK landlord who will be UK non-resident living in Thailand. I own some UK property as an individual and some UK property as UK ltd co which I am the director and 100% shareholder.

The money I receive from properties I own individually is taxed by HMRC as UK income, the money I receive from the UK ltd co is by way of dividend which my UK ltd co pays corporation tax to HMRC on at 20%.

As a non-resident living in Thailand, I have the following assumptions / questions:

1) I understand that I do not have a tax liability to HMRC for the dividends my UK ltd co pays to me, i.e. I do not have to pay dividend tax to HMRC for the dividends awarded to my by my UK ltd co.

2) Do I have to declare my UK dividend income to Thailand ?

3) Do I have any tax liability to Thailand for the dividends my UK ltd co pays to me ? The post above seems to say that Thailand does not charge dividend tax on dividends received from UK companies.

Thank you for your advice.

It has been discussed on here previously and generally accepted that Thailand does not tax money brought in as long as it is not in the year it has been earned/paid. However how would they actually be able to discern when something was earned and more to the point why would most people you even consider declaring it especially as the Thai revenue collectors do not seem that interested...........

As long as you are golden with HMRC I would suggest do nothing

I've been subject to several compliance checks by HMRC already. If at some point in the future, I am subject to another, HMRC will, I am sure, ask for the receipts to show taxes paid to Thailand on the dividends I have received from my UK ltd co.

What are the rates charged by Thailand on dividend income brought into Thailand during the same year it has been earned ?

When you say "same year", is it same calendar year or same tax year? when do the tax years run from / to ?

I would suggest that unless you should be paying tax to HMRC on it why would they care? I don't know if you should but if I was you, and unsure, I would ask them. Just reading what you wrote again I take it you are currently still a UK resident for tax purposes? ("As a UK landlord who will be UK non-resident...")

Thai income tax rates have been discussed in other threads so maybe try to do a search - sorry as it does not affect me I am not au fait with the numbers.

Thai tax year is calendar year - so a new tax year has just started 1st January. If you have interest from savings accounts here you can now reclaim any tax taken from the interest received last year.

In theory you have up to the end of March which is by when a tax return should be completed if you were also paying Thai taxes.

[Ricardo]

As a UK landlord who will be UK non-resident living in Thailand. I own some UK property as an individual and some UK property as UK ltd co which I am the director and 100% shareholder.

The money I receive from properties I own individually is taxed by HMRC as UK income, the money I receive from the UK ltd co is by way of dividend which my UK ltd co pays corporation tax to HMRC on at 20%.

As a non-resident living in Thailand, I have the following assumptions / questions:

1) I understand that I do not have a tax liability to HMRC for the dividends my UK ltd co pays to me, i.e. I do not have to pay dividend tax to HMRC for the dividends awarded to my by my UK ltd co.

2) Do I have to declare my UK dividend income to Thailand ?

3) Do I have any tax liability to Thailand for the dividends my UK ltd co pays to me ? The post above seems to say that Thailand does not charge dividend tax on dividends received from UK companies.

Thank you for your advice.

It has been discussed on here previously and generally accepted that Thailand does not tax money brought in as long as it is not in the year it has been earned/paid. However how would they actually be able to discern when something was earned and more to the point why would most people you even consider declaring it especially as the Thai revenue collectors do not seem that interested...........

As long as you are golden with HMRC I would suggest do nothing

Perhaps it's time to open an offshore (to the UK, and perhaps to the EEC) bank-account, so that your 'UK ltd co' can pay the dividends into that, and you only transfer to Thailand in the following year ?

The same approach may well be helpful, if/when you start to receive a monthly pension (from whatever UK source), and which you wish to spend in Thailand ?

Presumably any other investments which you have, stocks & shares and so on, are/will-be held offshore too, so that no further UK tax-liability arises upon them ?

You might also take proper advice, if you haven't already, on possible steps to mitigate your estate's eventual UK Inheritance Tax bill ?

Edited February 2, 2016 by Ricardo

[ArranP]

Do you have the link to the thread please, i don't seem to be entering the correct sequence of keywords

[ArranP]

Do you have the link to the thread please, i don't seem to be entering the correct sequence of keywords

found it here http://www.thaivisa.com/forum/topic/752491-if-i-stay-in-thailand-for-more-than-180-days-do-i-need-to-pay-thailand-taxes/

[ArranP]

As a UK landlord who will be UK non-resident living in Thailand. I own some UK property as an individual and some UK property as UK ltd co which I am the director and 100% shareholder.

The money I receive from properties I own individually is taxed by HMRC as UK income, the money I receive from the UK ltd co is by way of dividend which my UK ltd co pays corporation tax to HMRC on at 20%.

As a non-resident living in Thailand, I have the following assumptions / questions:

1) I understand that I do not have a tax liability to HMRC for the dividends my UK ltd co pays to me, i.e. I do not have to pay dividend tax to HMRC for the dividends awarded to my by my UK ltd co.

2) Do I have to declare my UK dividend income to Thailand ?

3) Do I have any tax liability to Thailand for the dividends my UK ltd co pays to me ? The post above seems to say that Thailand does not charge dividend tax on dividends received from UK companies.

Thank you for your advice.

It has been discussed on here previously and generally accepted that Thailand does not tax money brought in as long as it is not in the year it has been earned/paid. However how would they actually be able to discern when something was earned and more to the point why would most people you even consider declaring it especially as the Thai revenue collectors do not seem that interested...........

As long as you are golden with HMRC I would suggest do nothing

Perhaps it's time to open an offshore (to the UK, and perhaps to the EEC) bank-account, so that your 'UK ltd co' can pay the dividends into that, and you only transfer to Thailand in the following year ?

The same approach may well be helpful, if/when you start to receive a monthly pension (from whatever UK source), and which you wish to spend in Thailand ?

Presumably any other investments which you have, stocks & shares and so on, are/will-be held offshore too, so that no further UK tax-liability arises upon them ?

You might also take proper advice, if you haven't already, on possible steps to mitigate your estate's eventual UK Inheritance Tax bill ?

IHT, sell/transfer to kids 7 years before I pass.

[KittenKong]

IHT, sell/transfer to kids 7 years before I pass.

You know when that will be seven years in advance? Few people do.

[ArranP]

No

[theking01]

the wording in the draft is "dividend ordinary rate goldenslot

[ArranP]

Thanks to Partington for post #17.

To add to the discussion, the 'accounting web uk' site had this:-

Disregarded income

santisuk | Fri, 23/10/2015 - 10:11 | Permalink

As Steve Kesby says, non-residents are effectively not liable to UK tax beyond the amount amount of any tax deducted at source (on dividend and other savings income only). Regarding dividend income, previously - and still in the current tax year - 10% tax was/is deducted at source by companies paying dividends, but that requirement to deduct tax at source placed on companies will be withdrawn with effect from 6 April 2016 as part of taxation on dividend income reform.

If the government does not introduce some special additional provision to replace that tax deduction at source for non-residents then it would seem that non-residents will in future be able to make investments via the UK and receive their UK dividend income gross with no further UK tax to pay. For those who have left the UK and have formally acquired non-resident status but still invest through the UK this is seemingly a significant gimme by the UK government. For instance this year I will suffer about GBP 7,000 of UK dividend tax deducted at source and for 2016/17 seemingly the equivalent amount will be zero. I live in a country (Thailand) which does not tax investment income earned abroad!

I am suspicious of a gimme like that. Has anyone heard of anything in the pipeline that might reinstate the government's tax-take on such income for NRIs. Anything in the Finance Bill that presumably is approaching finalisation or has recently been finalised (if the same timetable is adopted as when I was in practice)? I wait with bated breath!

For completeness I will note that:

1.Disregarded income for NRIs also includes savings interest income. I assume that banks and others will still be deducting tax at source on UK taxpayers so nothing changes on the tax position for that stream of income

2. Disregarded income is advantageous for those NRIs who have significant levels of UK dividend and/or other savings income. However you are not permitted a UK personal allowance if you go the disregarded income route. Accordingly for smaller amounts of dividend and/or other savings interest it is better to be fully taxed on such income (especially so now that there is to be a tax-free allowance on the first GBP 5,000 of dividend income next year) and claim the personal allowance.

HMRC will automatically select which route is beneficial for the NRI taxpayer (disregarded income or personal allowance) when a return is submitted, but obviously it helps to know how your tax is being computed.

I just read your post on accounting web.

As a director of UK limited companies I have paid myself in dividends. From your perspective you loose the 10% dividend credit which I assume is the "gimme" you are referring to.

From HMRC perspective there is little change, they still continue to collect corporation tax from the UK company at the same rate of corporation tax, which is the tax paid by UK companies on its profits before dividends are distributed.

Not sure if that answers your question.

On a separate note, I contacted HMRC a few days ago, they confirmed dividends paid to non-residents is dis-regarded income and not taxed so long as you do not use your UK personal allowance. I asked HMRC but they did not comment, if they would tax dividends if Thailand does not i.e. Thailand does not charge tax on income brought into Thailand in a different year it is earned. HMRC just said it is dis-regarded income and if there is no tax liability to the UK then there is no need to keep tax receipts from Thailand for HMRC.

Edited February 6, 2016 by ArranP