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- SA - Foreign Tax Credit Relief (FTCR) on US Dividends - 8.75% for basic rate tax payer?
PostedSun, 16 Apr 2023 10:27:41 GMTbyAndyR195
I tried to enter my US Dividends into the 23/24 on line self assessment form yesterday. As a basic rate tax payer I think that I am entitled to 8.75% of the 15% tax I have paid on the dividends in US (W-8BEN form completed). However I was not able to select 8.75% in the drop down box in the form. 7.5% is there and 8% is there but not 8.75%. Am I wrong in the % relief I should be claiming? If not should the on line form not include 8.75% in the drop down box?
PostedThu, 20 Apr 2023 12:16:40 GMTbyHMRC Admin 25
HiAndyR195,
You are entitled to tax relief of 15% on your USA dividends.
You should select 15% in the dropdown for the box marked "rate of tax credit relief allowed"
The foreign tax credit relief can be restricted to 15% of the USA tax paid.
Thank you.
PostedTue, 25 Apr 2023 21:38:28 GMTbyderek_er Chan
Hi HMRC,Refer to the above situation, I am entitled to tax relief of 15% on your USA dividends. I have £2,500 (Pre Tax) USA Dividends. There is 30% withholding tax in USA, so I got £1,750 in my account.If I claim Foreign Tax Credit Relief(FTCR), I try to fill in the SA106 as below. 1. Page F1, box 2: input 375. (=£2,500 x 15%)2. Page F2, 'Dividends from foreign companies', -Column A: input USA -Column B: input 2,500 -Column C: input 750 (=2500 x 30%) -Column E: input X -Column F: input 2,500Please correct me if I am wrong. Thanks.
PostedFri, 28 Apr 2023 16:27:35 GMTbyHMRC Admin 10
Hiderek_er Chan
That is correct.
Once the calculation is done, the credit will then be limited to the maximum relief allowable in the UK .
Thankyou.
PostedMon, 03 Jul 2023 16:53:33 GMTbyJohn44
I refer to the post by AndyR195 above and the response to it.I have US dividends on which I have paid 15% US tax. I selected 15% from the drop down menu which prompted an error message "WARNING: Please check and amend the entry below".Also the response states "The foreign tax credit relief can be restricted to 15% of the USA tax paid". Tax paid was 15% so 15% of 15% is 2..25%. That can't be correct surely?Help!
PostedMon, 10 Jul 2023 07:33:46 GMTbyHMRC Admin 5
HiJohn44
It will just be an advisory message to ensure you have selected the correct rate. the 15% applies to the gross dividend paid out spo that the tax figure doesnt exeed the limit.
Thank you
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The topic you've raised concerns the Foreign Tax Credit Relief (FTCR) on US dividends within the context of UK taxation. As an enthusiast in international tax matters, I've delved into various countries' tax treaties and policies regarding foreign income to understand how these mechanisms function.
In the UK, individuals receiving dividends from the US are subject to US withholding tax, often at a rate of 15%. The UK offers relief to prevent double taxation on this income through the FTCR, allowing individuals to claim a credit for the foreign tax paid against their UK tax liability.
The discussions you've provided delve into the intricacies of claiming this relief accurately on the UK's self-assessment tax form. The key points highlighted include:
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Tax Rate: The confusion lies in the specific percentage of relief one can claim. Some individuals believe they are entitled to claim 8.75% of the 15% US tax paid, while others argue for the full 15% relief.
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Calculation Method: There's a discussion on how to accurately calculate the relief on US dividends within the UK tax system. Some users suggest entering 15% directly, while others attempt calculations based on the gross dividend received and the US withholding tax.
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Restrictions: HMRC administrators clarify that the relief may be limited to prevent excessive claims, and the system might issue advisory messages to ensure correct selections without exceeding the limit.
The consensus seems to favor claiming the full 15% tax relief on the UK self-assessment form. While there's a discrepancy in interpretations, HMRC administrators clarify that selecting 15% should not exceed the limit and trigger errors, but it's meant to ensure users select the appropriate rate.
In essence, the discussion revolves around the nuances of correctly claiming FTCR on US dividends within the UK tax framework, aiming to prevent double taxation while abiding by the established regulations and limitations.
This intricate topic showcases the complexities individuals face when navigating international tax systems, highlighting the importance of accurate interpretation and application of tax relief provisions to avoid errors and potential penalties.
