INTM164500 - UK residents with foreign income or gains: dividends

Determination of rates of foreign underlying tax - Case V - inclusive rates - examples

Exceptionally the Underlying Tax Group will compute an inclusive rate , that is the underlying rate plus the rate of direct tax scaled down as in the case of dividends paid by a Jamaican company (see DT10553). For a dividend into the UK this is likely to have been at the request of the company.

An inclusive rate is computed as in the following example

Direct tax = 5%

Agreed rate of underlying tax = 24%

Inclusive rate = 5%(100 - 24) + 24 = 27.8%

If an inclusive rate of tax has been calculated the starting point for the United Kingdom measure of the Case V income is the net dividend after deduction of the foreign direct tax.

Example