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Hargreaves Lansdown are my SIPP administrator and they're saying they can't (or won't) reclaim any tax overpayment. I'm still hoping they'll forward my proof of non-SA residency to Link Group but as at today that's still under discussion with them ...
Nice Gold bounce today; getting close to the critical 1800 dollar level again; a decisive breakout through that would be bullish for Gold (and miners)
If you hold your shares inside a SIPP, presumably the Administrator will reclaim this 10% overpayment as a service to its accountholders.
Thanks.
Not forgetting (given its a one-off admin process) the savings in future years if, like me, you see this as a 'forever' hold ...
Thanks for this info bluemango. I’m not a big holder but it will save approx. £20 for about half an hour chore. Not bad returns.
Just to add, this is a one-off process. Link Group will keep your details and the correct amount will then be paid automatically in future years.
And it's all enabled by the South-Africa/UK Double Taxation agreement of 2002, which reduces the Withholding tax from 20% to 10% if you declare your residency status as not South African.
Here's some further info re PAF withholding tax, for those whose holdings are held in nominee accounts. My plan is to make this my last post on the subject, as it obviously doesn't help the investment case to highlight this.
To have the correct 10% deducted instead of the default SA rate of 20%, shareholders need to email Foreignservices@linkgroup.co.uk and ask them to send you a Non-South African Tax Resident Declaration. Fill it in and then send it to your nominee account holder and ask them to check and amend if necessary, and then for them to return it to Foreign Services Team, Link Group, Central Square, 29 Wellington Street, Leeds LS1 4DL.
Although I completed must of the form myself, officially the completed form should come from your nominee, hence the advice to send it to them and ask them to check, complete if necessary and then return it to Link Group who are PAF's share Registrars. It's the responsibility of the nominee, but most will be unaware of the process and therefore require a bit of persuasion and help by you filling in what you can, first.
Unfortunately the form is not available online to download. Some will decide it's not worth the effort. In my case, it is.
Have just spoken at length with HMRC on subject of SA 20% withholding tax on dividends. It's slightly convoluted, but this is my current understanding:
PAF should only deduct 10% for payment to UK residents because of our Double taxation treaty (2002, article 10, section 2c). If they deduct the full 20% we should be able to claim back the 10% direct from the SA tax office; may need proof of UK residency via a certificate of residency which HMRC can provide.
Regardless of whether they deduct 20% or the correct 10%, as a UK resident you should also use the Foreign Income section of tax return to claim Foreign Tax Relief for the 10% that should have been deducted at source. This is because our taxation is calculated based on the gross amount, so you want to reduce this by the 10% to avoid in effect being taxed twice.
Example, gross dividend £700, should have 10% deducted at source giving £630 net. If PAF have incorrectly deducted 20% that would take it down to £560 and you would be entitled to claim back £70 direct from SA tax office. Regardless, you would claim Foreign Tax Credit relief of £70 to ensure your personal UK tax calculation was based on the £630 receivable rather than the gross amount £700. In effect it would reduce your taxable income down by the 10% already taken off at source (£70 in this example).
Clear as mud?
I understand if it is a US stock, then you need to pay 30% withholding tax reducing to 15% by completing W-8BEN.
https://www.paystream.co.uk/blog/personal-tax/foreign-dividends-avoid-getting-taxed-twice/
https://www.investorschronicle.co.uk/tax/2019/08/01/make-sure-you-follow-the-right-tax-procedures-when-investing-directly-in-overseas-shares/
Hi Gavster'
If you are a UK tax payer you should be able to claim at least a 50% tax refund due to the Double Taxation treaty. You will probably need to submit a paper or online tax calculation for the year. I have successfully done this with other foreign dividends in the past and will certainly be trying to reclaim this tax. Previously I only held PAF in an ISA so cannot reclaim that via the taxman. But I now hold PAF shares in an ordinary dealing account as well, so will attempt to claim back the tax on the Dec 2021 divi, but that will be a year from now.
Any (non ISA holder) who was taxed on the Dec 2020 dividend could try to reclaim the tax by submitting a tax assessment by end of Jan 2022.
Hi all. Has anyone had any success in registering for the lower tax rate on the Xmas dividend ?
These were the unhelpful replies from EQi and Interactive Investor across my ISA/SIPP/Trading A/c
"Unfortunately, we do not offer a tax reclaim service and would therefore be unable to assist you with your query."
And..
"I have queried this with our Operational Tax team and they have informed me that the dividend is paid at 20%, Interactive
Investor do not have a tax arrangement with the South African tax authorities. If you do wish to reclaim any withholding tax, contact the South African authorities and make a claim, as a non-advisory service we would not be able to provide any advice on how to make this reclaim."
I'm guessing that that the only way possible to claim back the 10% is to transfer my holdings to a old fashioned share certificates or equivalent on the shares held in the normal trading account only.