How to report Spanish dividend on UK Tax Return

[Anicetry]

Can anyone explain to me how I have to account for my 2 figure dividend from IAG (British Airways) on my Tax Return, and what other obligations I have in relation to it?

For a start, I am assuming that it goes on the Foreign Pages, as the company is based in Spain and the dividend was taxed and paid in Euros – though converted to sterling before I received it.

1 – The Foreign Pages request “income ...before tax” (column B) and details of tax deducted. According to the IAG dividend Tax Voucher, “Spanish Withholding Tax of 19%" was deducted at source. But is that equivalent to “Foreign Tax” (column C) or “Special Withholding Tax” (column D)?

2 – According to the “SPANISH TAX INFORMATION ON DIVIDENDS FOR IAG UK RESIDENT SHAREHOLDERS” notes on the IAG website, I am a ‘Qualifying shareholder’, and it says:

“A Qualifying shareholder may wish to claim exemption and/or a reduced withholding tax rate in Spain under the UK-Spain Treaty on dividends received from IAG.”

It goes on:

“A refund is claimed by filing a Form 210 and complying with the associated formalities.”

But adds:

“A Qualifying shareholder will generally need to appoint a tax representative in Spain to submit the Form 210 on their behalf. A fee will normally be payable for this and any associated services”

Given that the tax deducted amounts to less than £20, there is clearly no incentive to claim a refund (which would only be partial anyway), so my feeling is sod that for a lark. I’m inclined to give that particular bit of Spanish red tape a miss. However, the notes also say:

“If a Qualifying Shareholder does not claim a refund of Spanish withholding tax when entitled to do so, the Qualifying shareholder may be unable to claim a credit for that Spanish withholding tax against any UK tax liability arising on the dividends to which the Spanish withholding tax related.”

Does this mean I should not be putting an ‘X’ in column E to claim Foreign Tax Credit Relief?

[etf]

As the amount of your foreign dividend is small (up to £300), take a read of the tax return guidance notes for box 6 on page TRG 6. This may provide an alternative reporting method that will avoid you having to complete the foreign pages.

[Anicetry]

Thanks for replying. Sorry, I should have said – I have to fill out the Foreign Pages due to other foreign income.

[Anicetry]

I resorted to calling the HMRC self-assessment Helpline in the end. And the upshot is:

1 – It's the usual problem of nomenclature. What Spain and IAG describe as Withholding Tax, HMRC call Foreign Tax, so it goes in column C.

2 – I was told that even if I am not applying to Spain for a (partial) tax refund, I should still put an ‘X’ in column E to claim Foreign Tax Credit Relief. The implication was that when the sums were done by HMRC, it would be obvious from the figures that the full 19% tax had been deducted.


I'm usually hesitant about ringing HMRC as almost invariably no technician is available and I have to wait "up to 48 hours" for a callback. However, on this occasion I was put through to someone pretty promptly. So worth doing.