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HMRC internal manual

International Manual

HM Revenue & Customs
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UK residents with foreign income or gains: dividends: Shares treated as loan relationships

In some situations, a dividend is treated as interest for UK tax purposes by virtue of CTA09/S468B. This section does not affect the availability of relief for underlying tax. However, in some cases, the company paying the dividend may have made a deduction calculated by reference to that dividend in arriving at its relevant profits. In such cases, the dividend cannot represent a proportion of relevant profits (Step 2 of both TIOPA10/S58 & S61) and relief will not be available.