UK Withholding Tax (WHT) Calculator
The UK imposes withholding tax on certain payments to non-residents. Standard UK rates can be reduced by Double Taxation Treaties (DTTs). Select the payment type and recipient country to calculate WHT.
Frequently Asked Questions
Does the UK withhold tax on dividend payments?
No. UK companies do not withhold income tax on dividend payments — to either UK residents or non-residents. Dividends are paid gross. Non-resident shareholders may owe tax in their home country, but the UK imposes no WHT on dividends.
What is the UK withholding tax rate on royalties?
UK domestic WHT on royalties is 20% (basic rate income tax). This can be reduced or eliminated by a Double Taxation Treaty (DTT) between the UK and the recipient's country of residence. The treaty rate must be claimed in advance.
What is the UK withholding tax rate on interest?
UK domestic WHT on 'yearly interest' paid to non-residents is 20%. Treaty rates vary — many DTTs reduce this to 0% (e.g., US, most EU countries). Short interest (under 1 year term) may not be subject to UK WHT.
How do Double Taxation Treaties reduce WHT?
DTTs are bilateral agreements that cap WHT rates. To access treaty rates, the recipient must claim treaty relief in advance by submitting Form DTTP2 to HMRC for each payment stream. Without advance treaty approval, the payer must deduct 20% WHT.
What is Form DTTP2?
DTTP2 is HMRC's Double Taxation Treaty Passport Scheme application. Recipients based in treaty countries complete this form to obtain advance confirmation of reduced WHT rates. The passport number is then provided to UK payers.
Does WHT apply to payments to UK companies?
No. Withholding tax rules apply to payments to non-residents. Payments between UK companies are not subject to UK income tax withholding (other than CIS deductions for construction payments).
What is the UK WHT rate on patent royalties?
Patent royalties paid to non-resident individuals or companies are subject to 20% UK WHT under domestic law. Most DTTs reduce this to 0% (UK-US Treaty, UK-EU treaties). Treaty relief must be applied for in advance.
What is the Diverted Profits Tax connection to WHT?
DPT (25%) is separate from WHT. It applies to profit-shifting arrangements, while WHT applies to specific payment types. Both may apply to cross-border IP arrangements — DPT targeting the profit and WHT targeting the royalty payment.
When must WHT be paid to HMRC?
WHT deducted must be paid to HMRC quarterly — by 14 January, 14 April, 14 July, and 14 October. The payer files quarterly returns and annual reconciliation returns. Late payment incurs interest at the HMRC late payment rate.
What records must be kept for WHT compliance?
Records must include: payment dates and amounts, recipient details, WHT calculated, treaty relief certificates (DTTP2 approvals), quarterly return calculations, and evidence of treaty residence (tax residency certificates from recipient's local tax authority).
Does UK WHT apply to software licence payments?
Whether software payments are royalties (subject to WHT) or fees for services (not subject to WHT) depends on the nature of the licence. Payments for the right to use copyright (not just a product licence) are royalties. HMRC's guidance and OECD commentary help determine the classification.
What happens if WHT is not deducted when required?
The payer becomes personally liable for the WHT that should have been deducted, plus interest. HMRC can assess the payer for the full 20% that should have been withheld, even if the non-resident recipient has paid tax in their own jurisdiction.