This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

International Manual

UK residents with foreign income or gains: dividends: Dividends received by UK companies on or after 31 March 2001 - the mixer cap - examples and responsibility

A dividend can represent profits from only one subsidiary (a ‘singleton dividend’) or profits from a holding company and its subsidiaries (a ‘composite dividend’).

In both examples it is assumed that the rate of corporation tax is 30% throughout.

Example 1: Composite dividend

Use this link to view Composite dividend diagram

Two companies are both subsidiaries of a Dutch holding company, BV. H pays a dividend of 60 on which the rate of underlying tax was 40%. L pays a dividend of 80 on which the rate of underlying tax was 20%. The Dutch company then pays a dividend to the UK of 140 representing both of these subsidiary dividends. For dividends paid to the UK before 31 March 2001, the limitation of ICTA88/S797 was considered only for the final stage, the mixed Dutch dividend. The averaged underlying tax rate applicable there is 30%, and no further UK tax was therefore payable.

For dividends paid to the UK by BV on or after that date, the mixer cap restricts maximum credit by the formula (D + PA) x M%. This applies to each dividend that contributes to the eventual dividend paid into the UK:

Dividend: Tax attributable Mixer cap formula Credit allowable
L to BV 20 (80 + 20) x 30%= 30 20
H to BV 40 (60 + 40) x 30%= 30 30
BV to UK 60 (140 + 60) x 30%= 60 60


Although the mixer cap would allow a maximum of 60 if only the final dividend from BV to the UK were considered (as with TIOPA10/S42), because the mixer cap has also been applied to each component dividend the maximum credit is restricted to 20 and 30, total 50, only. There will be an additional 10% tax payable on the part of the final foreign dividend that represents the dividend from L.


For composite dividends the Underlying Tax Group at Nottingham will calculate both the mixer cap and the amount of Case B Eligible Unrelieved Foreign Tax (EUFT - see INTM164240 onwards). See:

INTM164440 for the information they require;

INTM164460 for the form of their response;

INTM164470+ for examples of the foreign income and credit relief calculation for a dividend received on or after 31 March 2001

(The legislation relating to EUFT was repealed for distributions paid on or after 1 July 2009.)

Example 2: Singleton dividend

Use this link to view Singleton dividend diagram

The mixer cap will restrict the maximum credit relief due on the dividend from H to (52 + 48) x 30% = 30.

Although the rate of underlying tax paid will be confirmed by the Underlying Tax Group the mixer cap restriction will be calculated by the Tax Specialist for singleton dividends.