INTM164490 - UK residents with foreign income or gains: dividends
Determination of rates of foreign underlying tax - Case V - standard cases - example
The Underlying Tax Group, Fitz Roy House, Nottingham normally
only computes a rate of
underlying tax (see
INTM164010 paragraph (d)) and does not
usually require evidence of or comment on the
direct tax (see
INTM164010 paragraph (c)) charged on a
dividend. Exceptionally they will compute an inclusive rate (see
INTM164500).
In a standard case where the rate relates only to underlying
tax, then the starting point of the calculation of the Case V
income is the gross dividend before deduction of any foreign direct
tax.
Example
| £ | ||
| Gross dividend | 200,000 | |
| Direct tax (5%) | 10,000 | |
| Underlying rate (as
notified by
UTG) | 24% | |
| Case V computation | ||
| £ | ||
| Gross dividend | 200,000 | |
| Gross at 24%
(200,000/0.76 x 0.24) |
63,157 | |
| Case V income | 263,157 | |
| £ | ||
| Corporation Tax at 30% | 78,947 | |
| Less Tax credit relief | ||
| Underlying tax | 63,157 | |
| Direct tax | 10,000 | |
| 73,157 | ||
| Net Corporation Tax payable | 5,790 |
The starting point in the Case V computation must be the net dividend in some other cases: see INTM164500 onwards.
