Guidance

HS300 Non-residents and investment income (2022)

Updated 6 April 2024

1. Non-residents and investment income

This helpsheet explains how income from UK savings and investments (such as interest or alternative finance receipts from banks or building societies, unit trusts, National Savings and Investments, or dividends from UK companies) is taxable if you’re not resident in the UK for a tax year.

It includes a working sheet, which you only need to use if you decide to calculate your tax.

2. How is investment income charged to tax

v With the exception of income from property in the UK and investment income connected to a trade in the UK through a permanent establishment, the tax charge for non-residents on investment income arising in the UK is restricted to the amount of tax, if any, deducted at source. If the tax charge is limited in this way, personal allowances will not be given against other income. This restriction does not apply in the overseas part of a split year.

3. Getting advice

This helpsheet explains the restriction but it’s only an introduction. If you’re in any doubt about whether the restriction applies or how it operates, ask your tax adviser or phone the HM Revenue and Customs (HMRC) Income Tax general enquiries helpline.

4. How the restriction works

If you’re not resident in the UK, the tax you pay on all your income cannot be more than:

• the amount of tax that would be chargeable on income, other than the ‘disregarded income’, but before the deduction of any personal allowances due
• plus the amount of tax deducted at source from the ‘disregarded income’

‘Disregarded income’ includes:

• interest and alternative finance receipts from banks and building societies
• dividends from UK companies
• income from unit trusts
• income from National Savings and Investments
• profits from public revenue dividends
• profits or gains from transactions in deposits
• certain social security benefits, such as State pensions or widows’ pensions
• taxable income from purchased life annuities except annuities under personal pension schemes

‘Disregarded income’ does not include a share of partnership investment income. If you receive dividend income from a partnership you cannot use this helpsheet. You should enter in the ‘Any other information’ box, box 19 on your tax return, the following words: ‘I have been unable to complete the Tax Calculation fully because I had a share in partnership dividend income and the self calculation sheet on HS300 does not provide for this. HMRC will need to complete the calculation for me.’

5. Calculating your tax

If you want HMRC to calculate your tax for you, you can ignore the rest of this helpsheet.

If you’ve decided to calculate your tax yourself see Tax Calculation Summary pages and notes. You will have to compare the amount of tax that would otherwise be due with the amount due as shown by this helpsheet. This is to make sure that you do not pay too much tax.

In some circumstances, you will be better off paying tax as if you were resident in the UK. Use the working sheet to make the comparison. There are instructions in this helpsheet on how to fill it in.

6. Working out the limit of your liability

1. Fill in the Working Sheet in the Tax Calculation Summary notes up to and including box A297. You will need to transfer some of the ‘A’ boxes to this working sheet.
2. Work out the limit of your liability by filling in the working sheet, following the instructions.
3. Compare box A297 of the Tax Calculation Summary notes to box 28 of the working sheet, and use the smaller figure.
4. Continue completing the Tax Calculation Summary notes to box A343a.

7. Filling in the working sheet

7.1 Boxes 1 and 2

Enter the details of the ‘disregarded income’, showing the totals of the gross income (box 1), tax deducted at source, tax credits or notional Income Tax (box 2).

7.2 Box 3

Enter your total gross income for the year minus deductions. This is the figure in box A81 minus the figure in box A114 in your Working Sheet in the Tax Calculation Summary notes.

7.3 Box 4

Deduct the figure in box 1 from the figure in box 3.

7.4 Box 5 to 7

Employee contributions to personal pension plans and Gift Aid are normally paid net of tax at the basic rate. Further relief is due if you’re liable to higher rate tax.

Add together:

• pension payment relief, from box A109
• Gift Aid payments, from box A110

Then enter the total in box 5. Add box 5 to box 6 and enter the result in box 7. Box 7 is your basic rate band limit.

7.5 Boxes 8 to 15

Income up to your basic rate band limit is taxed at 20%. Any income over your basic rate band limit is taxed at 40%. Any income over the higher rate band limit is taxed at 45%.

7.6 Box 16

Enter the total tax due, from boxes 2, 9, 13 and 15, in box 16.

7.7 Box 17

Add together the total of Venture Capital Trust relief, Enterprise Investment Scheme relief, SEED Enterprise Investment Scheme relief, Community Investment Tax relief and Social Investment Tax relief from boxes A245, A247, A249, A251, A253 and enter the total in box 17.

7.8 Box 18

Enter in box 18 the figure of maintenance or alimony paid, from box A255a.

7.9 Box 19

Add together:

• relief for finance costs, from boxes A260b and A261a
• notional tax, from boxes A267f

Then enter the total in box 19.

7.10 Box 20

Add together the figures in boxes 17, 19, and 20 and enter the result in box 20.

7.11 Box 21

Subtract the figure in box 20 from the figure in box 16.

7.12 Box 22 to 25

Copy the figure from box A270 to box 22. Boxes 23 to 24 ensures there is sufficient tax to ‘cover’ any Gift Aid payments.

7.13 Box 26

As well as Income Tax you may need to pay a tax charge on additional items. These include Pensions Savings charge, State Pension Lump Sum charge, tax charge on Child Benefit, Coronavirus support payments incorrectly claimed charge and Self-employed Income Support payments incorrectly claimed charge.

7.14 Box 28

The maximum amount of Income Tax due from you is the total of the amount due after allowances and reliefs (except for personal allowances) and the amount of tax, if any, deducted at source.

8. Filling in the rest of the Working Sheet in your Tax Calculation Summary notes

Compare the figure in box 28 of this working sheet with the figure in box A297. Continue from box A297, replacing the figure in that box with box 28 of this working sheet, if smaller.

Follow the Tax Calculation Summary notes to box A343 as instructed.

9. Contact

Online forms, phone numbers and addresses for advice on Self Assessment.