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US Dividends at IBKR: W-8BEN and Foreign Tax Credit Relief

Updated: 21/10/2026

Why the US withholds 15% on your IBKR dividends, how much Foreign Tax Credit Relief you get on SA106, and what changes if your W-8BEN has expired.

If you hold US shares at Interactive Brokers with a valid W-8BEN, the US withholds 15% of each dividend instead of 30%. In the UK you declare the dividend gross on the SA106 foreign pages and claim Foreign Tax Credit Relief, which lets you deduct the US tax from the UK tax on that same dividend, but never more than the UK tax due on it.

The US taxes dividends paid to non-residents at 30% by default. The UK-US tax treaty reduces this to 15% for UK residents, and the W-8BEN form is how you claim the treaty rate. IBKR asks for it when you open the account.

A W-8BEN stays valid until the end of the third calendar year after the year you signed it. A form signed in 2023 therefore runs until 31 December 2026. If it lapses, or your address or residence changes and you do not update it, IBKR has to withhold the full 30% until a new form is in place.

The relief is the lower of the foreign tax you suffered (capped at the treaty rate) and the UK tax due on that dividend. For 2024/25 and 2025/26 that gives these results on dividends above your £500 allowance:

• Basic rate (8.75%): UK tax is lower than the 15% US tax, so it is wiped out completely, but the remaining 6.25% is simply lost.
• Higher rate (33.75%): the full 15% is credited and you pay the remaining 18.75% to HMRC.
• Additional rate (39.35%): the full 15% is credited and you pay 24.35%.

Dividends covered by the £500 dividend allowance carry no UK tax, so there is nothing to set the US tax against. On those, the 15% withheld is a final cost.

You receive a US dividend worth £800 gross in sterling on the payment date, with £120 withheld in the US. Assume your dividend allowance is already used by other dividends.

• As a basic-rate taxpayer: UK tax is £800 × 8.75% = £70. Relief is the lower of £120 and £70, so £70. You pay £0 more, and £50 of US tax goes unrelieved.
• As a higher-rate taxpayer: UK tax is £800 × 33.75% = £270. Relief is the full £120, so you pay £150 to HMRC.

Either way, the dividend you enter on SA106 is £800, not the £680 that landed in your account.

1. In your IBKR Activity statement for 6 April to 5 April, open the Dividends section for the gross amounts and the Withholding Tax section for the US tax taken.
2. Net off any reversals and re-bookings. IBKR sometimes cancels a dividend or withholding entry and posts a corrected one, and only the final figure counts.
3. Convert each dividend and its withholding to sterling at the exchange rate on the payment date.
4. On SA106, enter the gross foreign dividends, the foreign tax taken off and the Foreign Tax Credit Relief you are claiming.
5. Add the gross dividends to your other dividends when working out how much of the £500 allowance is left.

The main SA100 return has a shortcut for small amounts of foreign dividends, but if you want credit for the US tax, use the foreign pages.

HMRC only gives credit for the treaty rate of 15%. The extra 15% is not a UK tax matter: you would have to reclaim it from the US tax authorities, which is slow and rarely worth it for small amounts. The practical fix is to renew your W-8BEN in the IBKR Client Portal as soon as you notice, so future dividends are taxed at 15% again.

• Entering the net dividend received instead of the gross amount.
• Claiming the full 15% as a basic-rate taxpayer, when relief is capped at the 8.75% UK tax.
• Claiming relief on dividends covered by the allowance, where there is no UK tax to reduce.
• Using the US Form 1042-S that IBKR issues. It covers the calendar year, not the UK tax year from 6 April to 5 April.
• Expecting relief for US tax suffered inside an Irish-domiciled ETF. That tax is paid by the fund, not by you, so there is nothing to claim.
• Overlooking payments in lieu of dividends, which can appear separately if your shares were lent out.

The 15% the US keeps is gone either way. What you can still lose is relief claimed wrongly, or tax underpaid on dividends you forgot to gross up. Upload your IBKR statement to Brokers.tax and see every dividend linked to its withholding, converted to sterling and ready for SA106, before the 31 January deadline arrives.