New queries, issue 4445

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Non-res and dividends

Income tax liability on close company dividends paid to temporary non-residents.

The statutory residence test which is at FA 2013 Sch 45 para 133 inserts the anti-avoidance legislation of s 401C (“temporary non-residents”) into ITTOIA 2005 Part 4.

I have read commentary regarding the above which says that the old planning for UK close company dividends still works for UK residents who receive dividends or distributions during a period that covers a whole tax year of non-residence.

This is because UK dividends are taxed in the year of receipt as UK-source income regardless of residence status. However for non-residents UK dividends are treated as “disregarded income” so the UK liability is limited by ITA 2007 s 811...