Foreign dividends

Produced by a Tolley Personal Tax expert

Personal Tax

Guidance

Overseas dividends are those received from companies not resident in the UK. ‘Dividends’ includes certain other distributions, see the Cash dividends and Non-cash dividends guidance notes. For the rate of UK tax on taxable dividends, see the Taxation of dividend income guidance note.

For tax purposes, the UK territories of the Isle of Man, Jersey and Guernsey are classed as overseas.

Is it a dividend?

Before determining whether the individual is taxable on the foreign dividend, it is necessary to check that the distribution is, in fact, treated as a dividend for UK tax purposes and is not a capital payment.

In considering whether it is a capital payment, the correct UK tax treatment is found by determining the legal mechanism by which the distribution is made in order to find the character of the payment under the corporate law of the jurisdiction in which the paying company is incorporated.

For example, in Beard, the Upper Tribunal found that a distribution from a Jersey company derived from its share premium account was a dividend and not a capital

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