Considerations for HK/SG Residents investing in UK Real Estate
· Dividends –
o From April 2016 the Dividend Tax Credit will be replaced by a new tax-free Dividend Allowance.
o The Dividend Allowance means that you won’t have to pay tax on the first £5,000 of your dividend income, no matter what non-dividend income you have.
o You’ll pay tax on any dividends you receive over £5,000 at the following rates:
§ 7.5% on dividend income within the basic rate band
§ 32.5% on dividend income within the higher rate band
§ 38.1% on dividend income within the additional rate band
§ Personal Allowance: £11,000
§ Basic Rate Limit: £32,000
§ Higher Rate Threshold: £43,000
§ Additional rate band: Over £150,000
o Note wording of the treaty - 2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed:
§ (a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company which controls, directly or indirectly, at least 10 per cent of the voting power in the company paying the dividends;
§ (b) 15 per cent of the gross amount of the dividends in all other cases.