I have some shares in an American Co. Until about a year ago, I received dividends in dollars, paid by cheque and net of the US withholding tax. I have declared these as foreign income on my tax return and had the benefit of the double tax relief. The effect being that I've had my UK tax bill increased.
Last year I chose to receive the Co's dividends in stock. I am now doing my 2007-8 tax return and as I read the guidance notes on filling in the foreign income pages it looks as if I will no longer have to pay UK tax on this distribution. (FN7 is the page).
I am presuming that this is because the income doesn't come to the UK.
If this is true then what stops me going on electing to take shares and then selling them each year and getting the money back to the UK. Since the sums arising would be well below any CGT threshold, I'd save tax.
Am I right?
MJ