Tax on UK company dividends

Hi

I'm thinkng of buying some UK shares and am wondering on the tax implications of any dividends received. A friend tells me it is inadviseable to own UK shares as UK tax is deducted by the company at the basic rate and Irish tax then due at the top rate. Can anyone give me an example of what tax I would pay on say a dividend of £100?

Many Thanks for any replies, great site.

ndublinooc said:

Can anyone give me an example of what tax I would pay on say a dividend of £100?

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We'll say €100.

UK compnay declares a gross dividend of €100. They will withhold 10%, so you get €90.

This €90 is then taxable in Ireland at your marginal rate. If you are already paying tax at 42% on your salary/other income, you will pay 42% on your €90.

That will leave you with €52.20 from your original €100.

I assume you're not buying the shares for the dividends but rather for the capital growth.

Ham Slicer said:

We'll say €100.

UK compnay declares a gross dividend of €100. They will withhold 10%, so you get €90.

This €90 is then taxable in Ireland at your marginal rate. If you are already paying tax at 42% on your salary/other income, you will pay 42% on your €90.

That will leave you with €52.20 from your original €100.

I assume you're not buying the shares for the dividends but rather for the capital growth.

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I thought that you were taxable in Ireland at your marginal rate (say 42%) but could claim a deduction for the amount of tax withheld in the UK ? Leaving you with 58 ?

Thanks Hamslicer, thats what I was led to believe. In answer to your question, yes I am interested primarily in capital growth but surely dividends are part of the equation also.
With this tax rate (48% circa) applying to such income I am sure many are incentivised to invest in Irish shares/property rather than the many excellent companies listed overseas. Seems to limit the diversification available to irish investors.

AJC said:

I thought that you were taxable in Ireland at your marginal rate (say 42%) but could claim a deduction for the amount of tax withheld in the UK ? Leaving you with 58 ?

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See this recent thread.

Let's assume you're Irish Resident but working in Northern Ireland. Your salary is £20,286 which means that the tax paid in the North is £3,097.

Now let's assume you get €2,000 in dividends from UK company shares. You'd receive €1,800 after the UK company withholds DWT.

This means that you'd have to submit a return in Ireland which would look something like this:

Salary: ............ €30,429
Dividends: ......... €1,800
Total Income .... €32,229

Tax ............................... €6,445.80
- Single Persons Credit ...... €1,760.00
Tax Due ..........................€4,685.80

Detuct from this the Tax Credit for tax paid in North €4645.50 and your total tax due to the Irish government for the UK dividends of €2,000 will be €40.30.

That brings the total tax rate on the dividends to 12%.

Are this figures correct???