Withholding Tax: A Guide for Authors

Introduction

When your writing starts to find readers overseas, you may also find foreign tax authorities taking an interest in your earnings. One of the first surprises many authors encounter is something called withholding tax.

In this guide, we’ll explain what it is, when it applies, and how it interacts with your UK tax bill.

What is Withholding Tax?

Withholding tax is tax that is deducted at source when you receive income from another country. The payer—such as a publisher or platform like Amazon—sends a slice of your earnings to their local tax authority instead of giving it all to you.

So, if you’ve agreed to be paid $1,000 by a US publisher, you might only receive $700 if they deduct 30% withholding tax.

Why Is This Happening?

Countries impose withholding tax to ensure they collect some tax from people earning income from within their borders—even if those people don’t live there.

From their perspective, you’re a non-resident receiving income from a local source. That could be royalties, licensing fees, or payments for services.

What Do Tax Treaties Have to Do With It?

The UK has double taxation treaties with many countries. These agreements are meant to stop the same income being taxed twice—once overseas, and again in the UK.

The key point: Each treaty sets a specific rate of withholding tax that can be applied to royalties. In some cases, it’s 0%. In others, it might be capped at 10% or 15%.

If you follow the correct procedure to prove you are UK resident then the foreign publisher should apply the correct treaty rate. This means you can usually claim that amount as a credit on your UK tax return—so you don’t pay tax twice on the same income.

But What If the Wrong Rate Was Used?

This is where a common myth arises. Many people believe any withholding tax paid can be claimed back against your UK tax bill.

That’s not true. You can only claim relief for tax suffered in accordance with the treaty.

If too much tax was withheld—because the tax treaty rules weren’t correctly followed — then you usually cannot automatically offset the full amount. HMRC will only allow relief up to the correct treaty rate.

To recover any excess, you would need to go back to the foreign tax authority and try to reclaim it—which may involve a local tax return and possibly professional help.

What Can I Do About It?

Here are some practical steps:

  1. Check the treaty rate – You can find UK double taxation treaties on the HMRC website.
  2. Complete the paperwork early – Many publishers or platforms (like Amazon) will ask you to fill out tax forms—this is your opportunity to make sure the right rate is applied. For the US, there’s an online “tax interview” for Amazon KDP authors.
  3. Apply for a Certificate of Residence – This proves you’re a UK taxpayer. You can apply via HMRC’s online service. You usually need a certificate for each relevant country.
  4. Keep good recordsKeep copies of tax forms, payments received, and correspondence with the payer. This makes it easier to complete your UK tax return—and to challenge any errors.
  5. Get help if you need itIf you’re unsure, or if significant sums are involved, it’s worth getting advice. Reclaiming overpaid foreign tax is not always straightforward.

Example

Emma is a novelist based in the UK. Her US publisher sends her a $10,000 royalty payment but deducts 30% withholding tax ($3,000). Under the UK-US tax treaty, the correct rate is 0%.

Emma fills out the required forms and gets a Certificate of Residence, but the publisher ignores this and still deducts 30%.

On her UK tax return, Emma can only claim credit for tax that should have been deducted—which is 0%.

If she wants to recover the $3,000, she’ll need to apply to the IRS (US tax authority) for a refund. HMRC won’t give her credit for tax that shouldn’t have been paid in the first place.

In Summary

  • Withholding tax is deducted on overseas earnings like royalties.
  • Tax treaties may reduce or eliminate withholding tax.
  • You can only claim relief against UK tax for the amount permitted by the treaty—not whatever was actually deducted.
  • Prepare ahead and keep good records to protect yourself.