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Log on to IRIS Personal Tax and select the client.
Click Foreign then select Dividends and Interest.
Click New
then enter the income source details in this screen:
Ensure that the correct income type has been selected and that the Claim tax credit relief? option has been enabled for clients who are entitled to claim Foreign Tax Credit relief.
The Does not qualify for UK tax credit option has been removed from 2017 and onwards but when available, will only be applicable for the 2009 tax year onwards. Dividend tax credit is only available where the client holds less than a 10% share in the foreign company and the foreign company is not an offshore fund.
The Taxed on the remittance basis option should not be used from the 2009 year onwards. If the remittance basis is applicable this can be enabled within the Residence Questionnaire section.
Once the income source details have been added as outlined above,
click New to add the income
received within this screen:
Users are required to enter the gross amount before the deduction of
any foreign or UK tax the client may have paid.
Post 2017 Foreign dividends will no longer qualify for UK dividend tax credits and there will no longer be the need to gross-up any qualifying dividend when working out the UK tax due.
More information on how foreign dividend income should be dealt with for 2017 onwards can be found here.
Pre 2017 the amount will then be grossed up at a rate of 100/90 and shown within the income section of the tax computation. The 10% tax credit will be allocated within the other relief section of the computation.
This 10% tax credit amount can be claimed in addition to any foreign tax credit relief that the client may be entitled to.
If the client is not entitled to UK tax credits this amount can be removed from the computation as follows:
Log onto IRIS Personal Tax and select the client.
Click Foreign, select Dividends and Interest.
Double-click on the source record located in the top half of the screen to the right.
Enable the Does not qualify for UK tax credits option and click OK.