When a UK-based investor receives overseas equity dividend income, which one of the following types...

What is Withholding Tax?

Withholding tax is a tax levied by a foreign government on income, such as dividends or interest, paid to non-resident investors.

When a UK-based investor receives dividend income from overseas equity, the source country often deducts withholding tax before the payment is made.

Why the Other Options are Incorrect

A. Stamp Duty: This is a transaction tax levied in the UK on share purchases, not dividend income.

C. Value Added Tax: VAT is a consumption tax on goods and services, irrelevant to dividends.

D. UK Corporation Tax: This applies to company profits, not individual dividend payments.

ICWIM Study Guide, Chapter on Taxation: Explains withholding tax on cross-border investments.

UK Tax Regulations: Confirm the application of withholding tax on overseas income.

ReferencesThus, the correct answer is B. Withholding Tax.