How are foreign dividends from overseas shares taxed in the UK?

Full answer

If you are UK resident and domiciled (or taxed on the arising basis), foreign dividends from overseas shares or funds are taxable in the UK just like UK dividends. For 2026/27 you get the same GBP 500 dividend allowance, then pay 10.75% at basic rate, 35.75% at higher rate and 39.35% at additional rate. The complication is that many countries deduct withholding tax at source. You can normally claim Foreign Tax Credit Relief (FTCR) for that foreign tax, but only up to the amount of UK tax due on the same dividend, and often only up to the rate allowed by the relevant double taxation treaty. Worked example: you receive GBP 1,000 of US dividends with 15% (GBP 150) US withholding tax deducted under the treaty rate (claimed via a W-8BEN form). In the UK, GBP 500 is covered by the dividend allowance, leaving GBP 500 taxable at 35.75% for a higher-rate investor = GBP 179 UK tax. You can credit the foreign tax against UK tax, but only the proportion relating to the taxed slice; FTCR cannot turn into a refund of foreign tax beyond UK liability, and tax suffered on the allowance-covered part is generally lost. You report foreign dividends on the SA106 foreign pages of Self Assessment. Holding US shares inside an ISA removes UK tax but does not remove US withholding tax. Use the Dividend Tax calculator for the UK figure, and read FTCR guidance at gov.uk.

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More answers

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