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HMRC internal manual

International Manual

UK residents with foreign income or gains: dividends: Dividends received by UK companies on or after 31 March 2001 - eligible unrelieved foreign tax - group surrender - dual-resident company

The legislation relating to onshore pooling was repealed for distributions paid on or after 1 July 2009.

A change was made to the Regulations in December 2001. These have been amended to allow such surrenders to be made by a dual resident company.

The amending Regulations (SI2001/3873) were laid before the House of Commons on 4th December 2001.

A UK company must pay tax on a dividend from a foreign subsidiary. If this has borne foreign tax, the company may credit it (up to 30%) against the UK tax that it has to pay on the dividend. Excess foreign tax up to 45% may be used in a number of ways. For example, the UK company may surrender it to another company in the same group for the other company to use. Originally there was a rule that prevents a dual resident company from being able to surrender foreign tax. This restriction was lifted with effect from 5th December 2001.

The change was made because there were circumstances in which the restriction would operate inappropriately.