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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15946
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I was resident in the UK first seven months of

Customer Question

Hi, I was resident in the UK for the first seven months of this tax year and qualify for split year treatment. I'm not sure how dividends from my private limited company, paid after I left the UK are treated. Does it constitute taxable income, or is it not subject to additional income tax, as I understand the case is for dividends paid to non-residents?
Thanks
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. If you look here, you will see that the UK tax liability of a non-resident individual on UK dividends is restricted to the notional 10% tax credit that dividends are deemed to carry. If, however, your company is a close company (see here) and you return to the UK within 5 years of leaving, the dividends you drew whilst non-UK resident will be taxed in the tax year of your return to the UK but only if you were UK resident to at least 4 of the 7 tax years prior to your departure from the UK. Look here for confirmation. From 6 April 2016, dividends will no longer carry a 10% tax credit. A £900 dividend paid in 2015/16 is £1,000 for tax purposes. In 2016/17, the £900 dividend will be the gross income for tax purposes. If you look here and here, you will see how the new dividend tax regime will work. How this will affect non-UK resident recipients of UK dividends is not yet known but the Budget later this month should throw some light on the matter. Some have suggested that a withholding tax system will be operated for non-UK resident shareholders but that is pure speculation. I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
Thanks, ***** *****'t quite answer my main question which is whether dividends received in the 2015/2016 tax year, and after I left the UK, will be treated as income or non-resident dividends?
Expert:  TonyTax replied 1 year ago.
They will be treated as income as it is UK source income but the tax liability is limited to the tax credit due to your non-UK residency. This applies even if your dividends would take you into the 40% or 45% tax bracket were you A UK resident..
Expert:  TonyTax replied 1 year ago.
Hi.I'm just following up to find out if my answer helped or if you have any further questions.