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HMRC internal manual

International Manual

HM Revenue & Customs
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DT applications and claims : foreign dividends and interest payments

Payments of foreign dividends and interest - up to 31 March 2001

Where dividends or interest from abroad, other than foreign bank deposit interest, were paid through a paying agent in the United Kingdom or collected by a banker or similar in the United Kingdom

  • ICTA88/S118B required the paying agent to deduct United Kingdom Income Tax
  • ICTA88/S118C required the banker or other collecting agent to deduct United Kingdom Income Tax.

Paying and collecting agents were authorised to allow credit automatically for foreign withholding tax on dividends and interest.

An agent who gave provisional relief had to show on the dividend voucher the gross amount of the dividend and how the amounts of tax had been computed. The certificate of deduction of tax will show where credit for foreign tax is allowed, for example

Gross amount of dividend 100.00
Less foreign tax deducted at 15% 15.00
Amount after deduction of foreign tax 85.00
Less UK tax at 5% on £100 5.00
Net amount of payment 80.00