Commentary

C1.618 Computation of relief (tax credit)

Capital gains tax
Capital gains tax | Commentary

C1.618 Computation of relief (tax credit)

Capital gains tax | Commentary

C1.618 Computation of relief (tax credit)

The chargeable gain arising in respect of the disposal of the asset is computed in accordance with normal rules (see Part C2). The various items of consideration and allowable expenditure must first be converted to sterling at the exchange rates applying when the expenditure was incurred. The gain is then computed by reference to the sterling amounts. It is not correct to compute the gain in foreign currency and then translate the gain into sterling1.

UK tax is then computed in respect of the chargeable gain without any deduction for the overseas tax2 (see E6.434). The credit for overseas tax is limited, in the case of an individual, to the difference between3:

  1.  

    (a)     the tax payable on total chargeable gains including the overseas gain; and

  2.  

    (b)     the tax payable on chargeable gains excluding the overseas gain (see E6.435)

In the case of a company, the UK tax is equal

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