Dividends - tax on payments to foreigner shareholders?

[DormantwithCash]

Hi All,
My UK Ltd co has £95k in the bank and I am now a tax resident of Singapore.

There is no tax on foreign dividends for tax residents of Singapore.

if I pay the entire amount as dividends to myself, will there be any UK dividend tax credit to be witheld before I get it in Singapore?
or will I in fact miss out on the 10% tax credit?

I'm not sure how the figures would apply in the following simple example Ffrom Uk Govt Dividend info:
Tax on UK dividends : Directgov - Money, tax and benefits

1. Dividend paid to you (represents 90% of the dividend income) 2. Tax credit (10% of the dividend income) 3. Dividend income (dividend paid plus tax credit)
1. £63 2. £7 3. £70
1. £54 2. £6 3. £60
1. £90 2. £10 3. £100

in my case is it ;
1. £95k 2. £10.5 3. £105.56 or
1. £85.5k 2. £9.5 3. £95k
or something else?

[ratewhore]

If you're not a UK taxpayer, is the tax credit even relevant?

caveat: IANAA

[ASB]

Hi All,
My UK Ltd co has £95k in the bank and I am now a tax resident of Singapore.

There is no tax on foreign dividends for tax residents of Singapore.

if I pay the entire amount as dividends to myself, will there be any UK dividend tax credit to be witheld before I get it in Singapore?
or will I in fact miss out on the 10% tax credit?

I'm not sure how the figures would apply in the following simple example Ffrom Uk Govt Dividend info:
Tax on UK dividends : Directgov - Money, tax and benefits

1. Dividend paid to you (represents 90% of the dividend income) 2. Tax credit (10% of the dividend income) 3. Dividend income (dividend paid plus tax credit)
1. £63 2. £7 3. £70
1. £54 2. £6 3. £60
1. £90 2. £10 3. £100

in my case is it ;
1. £95k 2. £10.5 3. £105.56 or
1. £85.5k 2. £9.5 3. £95k
or something else?

Assuming you pay a dividend of 95k you receive 95k. Simple.

Just because you are a tax resident in Singapore doesn't mean you are not a tax resident of the UK. If you are tax resident in the UK then further tax would be payable by yourself based on your assessable income and associated tax credits, however offset by the DTA between Singapore and UK.

I just wonder if Singapore may consider the company as resident there due to the fact that that is where control is exercised from (not saying they will - just a consideration).

[Gonzo]

I am not an accountant, so this could all be wrong but it is an area that I had to look at before.

The thing to remember with the Tax Credit is that it is notional (thanks Gordon ) on the basis that your company has already paid Corporation Tax on its profits then when the net proceeds are passed on to a standard rate tax payer there is no further tax to pay. Non tax payers can't reclaim the tax credit though, its notional.

1. You need to be damn sure that you are no longer considered tax resident in the UK by HMRC and you need to make sure that you don't return to the UK except for short visits in the tax year that you pay yourself the dividend.

I have been out of the UK now for two whole tax years. For the first one HMRC demanded an SA return but that might just have been because my company had not been closed at that point and I was still listed as a Director. I am waiting with bated breath to see whether or not I will get told to do a 2010 / 2011 return.

2. As ASB stated, you also need to consider how your new home views your company. Some countries don't care but others take the view that your company becomes tax resident in their jurisdiction at the same time that you do.

From memory I think that Singapore is one of the countries that won't care about your company but you will need to check that out.

[EDIT] That's a point. If the OP is still a Director of a company then HMRC are still going to want SA returns

[ASB]

That's a point. If the OP is still a Director of a company then HMRC are still going to want SA returns

[pedant]
I am pretty sure there is no actual piece of legislation that requires a tax return simply because somebody is a company director. In practice HMRC are within their powers to demand an SA return from whoever they want if their is the possibility of them being subject to UK taxation.

Some possibly out of date info: Do director's HAVE to file Tax Returns?

[Gonzo]

[pedant]
I am pretty sure there is no actual piece of legislation that requires a tax return simply because somebody is a company director. In practice HMRC are within their powers to demand an SA return from whoever they want if their is the possibility of them being subject to UK taxation.

Some possibly out of date info: Do director's HAVE to file Tax Returns?

Yes. I think that HMRC demand the SA return if you are a company director, rather than it being an obligation of being a director.

The advice I read, and I think it was on the HMRC site, was that if I wrote on the return that I had no income liable to UK tax during the tax year and that I did not anticipate that changing in the future then HMRC would stop demanding the SA return every year.

That is what I did on the 2009/2010 return and I'll have to wait and see what happens this year although my company has now been struck off so it may not prove things either way.

[b0redom]

If that's the case, why don't more people go an stay in Singapore or some other such tax shelter for a tax year and pull out all the funds just before retirement and then shut down the company?

Assuming a healthy balance in YourCo that would seem to offer a nice holiday and a massive tax break?

I have no idea of the legals personally.

[configman]

If that's the case, why don't more people go an stay in Singapore or some other such tax shelter for a tax year and pull out all the funds just before retirement and then shut down the company?

Assuming a healthy balance in YourCo that would seem to offer a nice holiday and a massive tax break?

I have no idea of the legals personally.

You have to prove reasonably that you are out of the country indefinately and breaking all ties with the UK. It is not as easy at it sounds. For example you cannot be abroad and your partner still in the UK. You have to consider your own home which if you make unavailable for your own use by renting helps prove cutting ties - if you didn't rent you could come back anytime. If your children remain in UK education then you have not broken ties with the UK.

[Gonzo]

If that's the case, why don't more people go an stay in Singapore or some other such tax shelter for a tax year and pull out all the funds just before retirement and then shut down the company?

Assuming a healthy balance in YourCo that would seem to offer a nice holiday and a massive tax break?

I have no idea of the legals personally.

Unfortunately it takes more effort than that to be treated as non-resident.

If you take a whole tax year out and then return you will still be treated as having been resident for the whole time.


I went looking for the advice about getting HMRC to stop demanding SA returns and didn't find it, but I did find:

Company directors, ministers, Lloyd's names or members
You must complete a return if you're any of the following:
a company director (unless you're a director of a non-profit organisation, for example a charity, and don't receive any payments or benefits)
a minister of religion (any faith)
a name or member of Lloyd's

linky

[Clare@InTouch]

If that's the case, why don't more people go an stay in Singapore or some other such tax shelter for a tax year and pull out all the funds just before retirement and then shut down the company?

Assuming a healthy balance in YourCo that would seem to offer a nice holiday and a massive tax break?

I have no idea of the legals personally.

Residence and domicile is a complicated area, and it's harder than you think to lose your residency in order to get the tax result you want! Just a brief overview here:

Tax on overseas earnings from employment : Directgov - Money, tax and benefits