DT applications and claims: Types of income: Dividends: portfolio investors
The expression “portfolio investors” describes the great majority of shareholders. They include individual persons, pension funds, companies and others who have invested money in shares issued by the UK company. The number of shares owned by each investor may range from single figures to several million shares. If a shareholder owns 10% or more of the total number of voting shares that have been issued by a UK company they are called a “direct investor”. See INTM343540.
Some Double Taxation Agreements (DTAs) contain provisions that allow a portfolio shareholder to claim payment of part of the tax credit. In these treaties the dividend article usually provides that the amount payable is equal to the tax credit minus 15% of the aggregate of the dividend and the tax credit.
The rate of tax credit that is attached to a UK dividend is one ninth of the dividend. The effect of this rate of tax credit is that there is no amount for a portfolio investor to claim (see F(No2)A1997/S30(10)).
Tax credit (one ninth) £111.11
Dividend plus tax credit £1,111.11
15% retained in the UK £166.66
Because the amount to be retained in the UK is greater than the original tax credit there is nothing to pay. £111.11 less £166.66 equals nothing.