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bigduckontax
bigduckontax, Accountant
Category: Tax
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I am a United Kingdom national, permanently domiciled in the

Customer Question

I am a United Kingdom national, permanently domiciled in the UK.
I own stock in Vanguard Natural Resources, LLC - Common Units,(VNR).
The dividend that I have paid on these dividends has been subject to non- resident tax withholding of 39.60%.
Because of the current Double Taxation Agreement between USA & UK, other dividends I receive from US stock are subject to non-resident tax withholding of 15%.
Is non-resident tax withholding of 39.60% correct in respect of VNR dividends?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
Here is the information from Interactive Brokers:
'US tax law requires the withholding of tax for non-US persons (non-resident aliens) at a rate of 30% on payments of US source stock dividends'
However, some States also impose with holding taxes which may explain the extra 9.6%.
In any event the tax deducted is allowed as a tax credit against any UK income tax liability on the same income stream so even if you are in the higher UK tax bracket all but 0.4 of 1% would have been covered by the deductions. Unfortunately the Double Taxation Treaty does not protect you against differences in rates of taxation.
I do hope that I have been able to assist you. You enter such income as a foreign dividend on your annual self assessment tax return along with the amount of tax deducted.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 2 years ago.
Thank you for your support.