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Legislation will be introduced in Finance Bill 2009 to make changes to the system of taxation for individuals who own foreign shares.
Individuals in receipt of dividends from UK resident companies are entitled under current law to a non-payable dividend tax credit.
Since 6 April 2008, individuals with shareholdings of less than 10% in non-UK resident companies have also been entitled to a non-payable tax credit.
From 22 April 2009, individuals with shareholdings of 10% or more in receipt of dividends from non-UK resident companies will become entitled to a non-payable tax credit, subject to certain conditions.
The tax credit will only be available if the source country is a ‘qualifying territory’, i.e. one where there is a double taxation agreement with the UK, with a non-discrimination article.
The legislation will include anti-avoidance measures, including a targeted anti-avoidance rule to counter the use of conduit structures designed to secure the tax credit for dividend income originating other than in a qualifying territory.
