travelfar

Hello,
Thanks for any help, I've been googling all day and speaking to HMRC without finding the answer to this !
I am long-term non-resident in UK.
Am I correct in thinking that I do not have to declare foreign investment income on my UK Tax Return ?
Is this also the case, when this income is included on the Tax Document supplied by my UK based broker ?
This is a small new income stream, so the question did not arise previously !
Much appreciated

durham_lad

I can only tell you my experience of when I was a long term non-resident of the UK, receiving income from a UK private pension. I had to show that the UK income was being taxed in the USA to avoid HMRC taxing it. As a non resident I never paid tax or had to declare my foreign income, but you would need to check any tax treaty between the country you reside in and the UK.

travelfar

Thanks Durham Lad, fir your input. Your comment reflect my feelings on this. Pity HMRC were so unhelpful !

Johnboyuk

This can be complicated depending on where your official residency is and if you are taxed on your World-wide income. If you are a non-resident in the UK, does your resident country have a reciprocal tax agreement with the UK? If not, HMRC may want a piece of the pie. Foreign investment income derived in the UK is reported on UK tax certificates and needs to be declared.

In addition to your personal allowance, note that there is a £12,300 p.a. capital gains tax allowance in the UK which you can set any profits from investments against and a £2000 p.a. dividend allowance (overseas and UK) that you do not have to declare. UK brokers issue tax certificates after the end of the tax year (i.e. 5 April). Depending on your broker, it can take a couple of weeks or up to a few months.

I use a tax accountant because I consider they are worth the money for what they charge and the piece of mind you get.

Johnboyuk

These sites may help:

Tax on foreign income: Overview - GOV.UK (www.gov.uk)


Do I have to pay UK tax on my foreign income? (ridgefieldconsulting.co.uk)

travelfar

Thank you Johnboyuk, the links are extremely useful.
I am taxed in my country of residence on world wide income. The relevant tax treaty only refers to dividends paid in 'the contracting state', in this case UK. Thus I am assuming UK dividends must be included on UK self-assessment tax, but not foreign dividends.
I may try running this past HMRC again, but have not found them very useful on this point !
Thanks again

Johnboyuk

If foreign dividends are included on your UK tax certificate, they must be declared on your UK self-assessment because the shares or funds are presumably purchased on the London Stock Exchange. There is a specific declaration point for them on the UK tax form. The question is, do you need to complete a UK self-assessment if you are paying tax in your country of tax residence on your World-wide income? Foreign dividends usually apply to companies that choose to domicile themselves in places such as Jersey, Isle of Man, or Ireland presumably for their own tax benefits. Companies such as Petrofac and many funds domicile in Jersey and iShares and Vanguard Funds domicile in Ireland and are therefore 'foreign'. The only difference is that you do not pay stamp duty when purchasing these shares and funds on the London Stock Exchange but their dividends are taxed at a slightly higher rate by HMRC. That is why they are separated on the tax certificate.

For many people, HMRC is nothing more than a glorified call centre where you will find it hard to get a precise answer for anything than is not 'run of the mill'. They use a prompt screen that gives standard answers to standard questions. Ask anything non-standard and then life becomes difficult. You can ask to speak to a 'technical expert' on the subject matter you are enquiring about which is the best option. I prefer to write to them on issues I have had and then you get it an answer in 'black and white' but that can take months. Sorry for the inverted commas but I am sure you know what I mean. The whole business needs a overhaul but that is another story. Dickhead Boris is too focused on issues like bringing back the Imperial measurement system to try and stimulate English nationalism when we have never fully adapted to the metric system anyway. He may even get around to finalising Brexit one day.

If you declare everything on your tax certificate in your tax residency and there is a reciprocal tax agreement with the UK, I see no reason why HMRC should give you any grief but someone, somewhere, will want their pound of flesh. You can always run this by a local tax accountant for clarification.

Feel free to PM me if none of this is clear.

travelfar

Very many thanks Johnboyuk for your detailed response. Also thanks for the offer to PM you. I think I follow your thoughts and concur with your comments re:HMRC. I will try talking to a 'technical expert' as you suggest. I will let you know how that goes. I do not pay tax in the UK as I am below the threshold and this will be the same this year. However, I always complete a UK Tax Return as I feel it is best to keep HMRC 'in the loop' regarding my years of non-residency and the Statutory Residence Test. The main item I take from your reply is 'If foreign dividends are included on your UK tax certificate, they must be declared on your UK self-assessment ' as this is my situation. Thanks again, it is much appreciated.

Johnboyuk

You are welcome. Don't forget, in addition to your personal tax allowance, there is a £2000 dividend allowance which applies to foreign and UK dividends. The following link states 'You do not need to tell HMRC if your dividends are within the dividend allowance for the tax year.'

Tax on dividends: How dividends are taxed - GOV.UK (www.gov.uk)