Do foreign investors have to pay withholding tax on dividend in UK investments?
Dividends are distributions of profits. When they are paid, they carry a non-refundable tax credit equal to one-ninth of the amount paid. If a company pays a dividend of £9, it is deemed to be a dividend of £10, less £1 tax. A UK resident cannot claim this back even if they are not liable to tax. A foreign investor is also unlikely to be able to claim it back, but it depends on the wording of the double taxation agreement with the country they are resident in. Most DTAs will allow the UK to retain a tax credit of up to 15%. As our taxation rate is effectively 10%, there is normally nothing to repay.
