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Where Taxpayers and Advisers Meet

Split year and dividends taxation from UK company

smiling
Posts: 9
Joined: Mon May 11, 2009 9:16 am

Split year and dividends taxation from UK company

Postby smiling » Tue Apr 11, 2017 11:06 am

Hi!

I wanted to ask a clarification. On split years (from UK residence to overseas residence), are dividends paid during the resident part of the split year subject to UK taxation (incl. the £5k allowance?).

I couldn't find much guidance.

maths
Posts: 7550
Joined: Wed Aug 06, 2008 3:25 pm

Re: Split year and dividends taxation from UK company

Postby maths » Tue Apr 11, 2017 11:42 pm

The issue is to identify the rules as to when UK dividend income falls subject to UK income tax.

Where the dividend is a final dividend it falls taxable at the date of the resolution if no specific date of payment is stated otherwise it falls taxable on the date of payment specified.

Where the dividend is an interim dividend it falls taxable on the date of payment.

So, If the interim dividend payment is in the residence part of the split year it falls taxable. If it is a final dividend then if resolution or payment date falls in the residence part of the split year it is taxable.

smiling
Posts: 9
Joined: Mon May 11, 2009 9:16 am

Re: Split year and dividends taxation from UK company

Postby smiling » Wed Apr 12, 2017 7:14 am

Thanks for this.

I assume another complication is when the interim dividends is paid onto the director's/shareholder account, so in my understanding means that it was paid.

Example: interim dividend approved today 12/4, paid today to the director's/shareholder account, left there and the borrowing is then paid back to the director say in july for example sake. This means the dividend is taxable on when is paid that is today. Whether it is paid on director's account or on director personal bank account doesn't make a difference as it is now property of the director.

Is my understanding correct?

maths
Posts: 7550
Joined: Wed Aug 06, 2008 3:25 pm

Re: Split year and dividends taxation from UK company

Postby maths » Wed Apr 12, 2017 12:01 pm

Correct.

Don't forget the temporary non-resident provisions may also be in point; if so the dividend is treated as paid in the UK part of the split year of the tax year of return.


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