Tax residence and permanent establishment
UK dividends carry no withholding tax; interest and royalties often do, though rates are commonly reduced or removed under a double tax treaty.
Short answer
UK dividends have no withholding tax, whoever receives them. Interest and royalties paid to overseas recipients generally carry 20% UK withholding tax at source, though this is commonly reduced, sometimes to nil, under a double tax treaty or specific exemption, provided the correct clearance is obtained in advance.
Written and reviewed by Waqas Sagar Member of ICAEW, Fellow of ACCA, Fellow of AAT, a double graduate and entrepreneur at heart, helping startups grow and serving thousands of businesses nationwide with an excellent team. Published by LimitedCompany.Accountants, 12 London Road, Morden, London SM4 5BQ. Reviewed 12 September 2026 against 2026/27 UK rates and current Companies House and HMRC guidance.
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QuickBooks PartnerCertified ProAdvisor100+ yearsCombined team experienceFully insuredUp to £2m indemnityUK dividends have no withholding tax, whoever receives them. Interest and royalties paid to overseas recipients generally carry 20% UK withholding tax at source, though this is commonly reduced, sometimes to nil, under a double tax treaty or specific exemption, provided the correct clearance is obtained in advance.
The three payment types compared
Claiming treaty relief in practice
Dividends: no UK withholding tax applies at all, regardless of the shareholder's country of residence, making them administratively the simplest route for extracting profit to an overseas owner.
Interest and royalties: a 20% basic rate withholding generally applies unless a treaty reduction or a specific exemption, such as certain intra-group interest exemptions, is claimed and, where required, formally cleared with HMRC in advance.
The overseas recipient usually needs to apply to HMRC, often using a form specific to their treaty country, or obtain advance clearance, before the UK company can pay gross or at the reduced rate; paying gross without clearance risks the company having to account for the shortfall itself.
Get the treaty rate and paperwork confirmed before the first payment is made rather than after, since retrospective corrections involve reclaims, interest and administrative delay on both sides.
Our fixed monthly packages for a UK limited company start at £89 plus VAT and run to £169 and £289 plus VAT as bookkeeping, VAT, payroll and reporting are added. One-off filings are sold at fixed prices, and the Companies House fees we pay for you are charged at cost with no VAT added. Overseas owners are quoted on exactly the same published prices as UK-resident clients.
Rates, thresholds and deadlines here reflect the 2026/27 UK position and current Companies House and HMRC guidance. Check GOV.UK, or ask us, before relying on them for your own company.
Primary references
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We work with company directors across London and Surrey from our office at 12 London Road, Morden, London SM4 5BQ. Pick your area, or send the form below and we will call you back.
Frequently asked
Generally yes, at 20%, unless a treaty reduction or exemption is properly claimed and evidenced.
Not necessarily; their home country may tax the same income too, with credit for UK tax withheld.
No, those are taxed under PAYE rules, not the interest, royalties and dividends withholding regime.
Keep bank statements, sales and platform reports, purchase invoices, payroll records, VAT workings, finance agreements and Companies House correspondence. We confirm the exact list at onboarding and identify gaps before a filing deadline becomes urgent.
The fee depends on transaction volume, record quality, VAT and payroll requirements, historic catch-up and the level of reporting needed. We agree a fixed scope and price before technical work starts, with published packages available on our fees page.
Yes. We request professional clearance, collect the prior records and authorities, check the next Companies House and HMRC deadlines, and give you one clear handover list. The process is normally completed remotely.
Yes. We work through secure cloud records, scheduled reviews and digital approvals, while keeping a named team available by phone, video call and email. Clients can also visit our Morden office by appointment.
We regularly work with Xero, QuickBooks, FreeAgent, Sage and connected sales or expense apps. The right setup depends on transaction volume, integrations and the reports you need, not simply the software brand.
The relevant calendar may include annual accounts, Corporation Tax payment and return dates, confirmation statements, VAT returns, payroll submissions and Self Assessment. We map the dates from your company year end and registrations.
Yes. You can ask a straightforward initial question without charge. Calculations, filings, written advice, planning and HMRC correspondence are scoped and quoted before work begins.
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Pick a time that suits you and a qualified accountant will call you about your company, deadlines and fees.
Appointments run monday to friday, 9:00am to 5:30pm. Your confirmation is emailed straight away.
