Tax on UK and Foreign Dividend Income | MoneyGrower. How dividends are tax for UK residents can be a tricky subject for many, but here I will explain how both UK and Foreign dividends are treated for different tax bands. This post relates to the old dividend tax rules that involved a tax credit. For the new tax rules on Uk dividends which took effect on 6 April 2016, see the following post: UK Dividends Many people have the assumption that when dividends are paid, tax is already deducted and you will not have to pay any more taxes. Well this is incorrect. Note that if you own shares in an ISA, you do not have to pay any taxes on dividends. Dividends paid to UK shareholders of UK companies qualify for a non-payable tax credit of one-ninth of the dividend.
As mentioned earlier, the dividend a shareholder receives is made up of a tax credit and the dividend received. Worked Examples: Foreign Dividends Lets look at an example. Please like & share: