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HMRC internal manual

International Manual

UK residents with foreign income or gains: dividends: Tax deductions for dividends

In some situations a foreign jurisdiction may give a tax deduction in respect of the payment of a dividend. Where this applies and the dividend receipt is taxed in the UK, the deduction means that there is no double taxation of the profits included in the dividend. Underlying tax relief should therefore not be given.

TIOPA10/S57(3) denies underlying tax relief in any case where a dividend is paid by a person in a foreign jurisdiction and a tax deduction is given to any person in that jurisdiction calculated by reference to the amount of the dividend. If a partial deduction is given for the dividend, then no relief for underlying tax is available for any part of that dividend. These changes apply to dividends paid on or after 16t h March 2005.