UK Dividends on Forms 2047 and 2042

[bkm7]

On Form 2047 Heading 2 Dividends. Line 204 the “Taux applicable” remains in place and is 17.7% for the UK. (this in spite of UK Dividends under £5,000 not taxable in the UK since 6 April 2016). In previous years, the credit d’impôt calculation moved out to a box on the right which was then posted to box 8TA on 2042 resulting in a tax credit. This year there is no posting to 8TA and hence no tax credit. Am I missing something asking why dividends received would be increased by 17.7% for French Taxation when they were not taxed in the UK in the first place?

B

[cajal]

To get around the Royaume-Uni tax anomaly in line 204, on form 2047, I calculated what the net value of our divi income would have been before the 17.7% was added and entered that figure in line 203. This resulted in our actual divi income appearing in line 209 to be entered in line 2DC form 2042

[Buzby]

I had the same issue when I posted about a week ago, and it seems that nobody really knows since there were no replies.

By putting your net income in line 203, putting 17.7% in line 204, it seems that the french will then tax you on your net income + 17.7%, which goes into box 2DC, without later making an allowance for this since 8TA, though it appears on the 2042 form, is no longer used for this purpose.

As for me, I put in my net dividend income in line 203. I then put in 17.7% in line 204 as the instructions on the 2047 form (page 4) indicate I should, and the result went into box 2DC and carries over to the 2042 form.

Then, in section 7, reading carefully the instructions for this section, particularly the bit in brackets - après déduction etc - I carried the numbers over from section 2. The 17.7% bit goes into 8VL, appears as a tax credit and goes into the 2042 form in section 8 DIVERS.

I don't know whether this is correct or not, but is at least consistent with what I did last year. Maybe the french have not yet caught up with the new rules in the UK? Also, I really don't know where this number of 17.7% comes from, but I'm guessing that it may derive from the fact that dividend income is liable to both income tax and CSG. Maybe one should put 0% in line 204, if the dividends are less than £5000; that might be fair.

[suein56]

cajaal wrote : To get around the Royaume-Uni tax anomaly in line 204, on form 2047 ...

Nifty; thanks for that.

I was wondering what I was going to put as it seems neither country can quite keep up with the changes they each make.

Edit : Just read Buzby's answer and that seems doable too ... so now I am confused.

Sue

[woolybanana]

Me confused too!

[woolybanana]

??????

[cajal]

[quote user="Buzby"]

 Maybe one should put 0% in line 204, if the dividends are less than £5000; that might be fair.[/quote]

This logic would only be applicable to dividends received on or after 6th April 2016. Any dividend income received between Jan 1st 2016 and 5th April 2016 is subject to the previous tax rates. Also, if the income received post April 5th is >£5000, it then becomes liable for UK tax requiring a UK reclaim.

The way I see it is the same as Buzby, in so much that if the tax declaration software writers chose to default UK dividened income to 17.7% (this figure can be overridden to zero manually but I don't perceive that as being my responsibility). It then must follow that the pre-calculated Résultat can legitimately be entered into form 2042, section 8 in line 8VL.

So, yes, go for it. What is the worst that can happen? Not allowed....due to misunderstanding?

If you decide to contine and declare in 8VL, and someone tugs you about it, tell them I told you it would be ok to do so.

[bkm7]

Many thanks for all your replies. As all my dividends fell after 6 April 2016 I am going to put the actual dividend amounts received in line 203 and put the taux applicable as 0.0% in 204. Grossing up the figure for 2DC and then claiming a tax credit in 8VL does result in a lower impôt and CSG figure but not so easy to justify if asked to do so!

B

[parsnips]

Hi,

   If you would only read the instructions on the form you would see that you enter the lesser of 17.7% or "the actual tax borne in the UK".   So you don't use 17.7% for 2016 income, you use the actual figure which is around 11.1%.   However , 2017 tax certificates show 0 tax credit , so on the face of it you should enter "0" on the 2047 and 2042 for tax credit .

     When I looked at 2016 and 2017, I found that the tax credit appeared to be based on a reduction of the" dividend rate "  used by the company to calculate the dividend payable. So any tax is paid by the company.  I have written to one of my investment holders asking for clarification on this , and also to what taxes their profits , on which the dividend is based , are subject.   It would seem to be that the 19% corporation tax  must impact on the dividend.   I think  that, based on that ,one would be justified in claiming the default credit of 17.7% next year.   The form 2047 asks for the actual foreign tax which the the dividend has borne, not what tax has been paid abroad by the declarant.

[JohnFB]

Thanks for that Parsnips. That has been my interpretation too and I continue to use the tax credit given in 2047 on that basis. It is in line with the UK treatment where the dividend distribution carried a deemed tax credit. When companies distribute dividends they do not deduct a tax a pay out the net in the UK.

JFB

[cajal]

[quote user="parsnips"]Hi,

   If you would only read the instructions on the form you would see that you enter the lesser of 17.7% or "the actual tax borne in the UK".   So you don't use 17.7% for 2016 income, you use the actual figure which is around 11.1%............................The form 2047 asks for the actual foreign tax which the the dividend has borne, not what tax has been paid abroad by the declarant.[/quote]

It seems to me that you could be over complicating what for years I've always found to be a relatively simple declaration.

The taux applicable was previously 11.2% and increased to 17.7% in tax year 2012 (declared 2013).  As long as I have been declaring dividend income I have always calculated a net figure for declaration in line montant net encaissé which when the taux applicable is applied the line Resultant produces the figure I would enter in the line TA on the old form 2047 (now line 206). This Montant total de credit impot would be reported in line 2CA on form 2042 ( now line 8VL)

This method has always been acceptable to my tax office as the dividend credit impot shows up under Credits d'impot, Imputations on our Avis d'Impôt as (Retenue à la source ou impôt payé à l'étranger) plus several other credit impots I claim

 

As the system, for me, doesn't appear to be broken I won't be fixing it unless circumstances or the situation changes.