The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
Income and gains may be taxable in more than one country. The UK has three ways of ensuring that theindividual does not bear a double burden:
treaty tax relief may reduce or eliminate thedouble tax
if there is no treaty, theindividual can claim ‘unilateral’ relief by deducting theforeign tax from their UK tax
the individual can also deduct theforeign tax as an expense from their income (known as relief by deduction), although this is generally less efficient
This guidance note looks at these three options in turn, and then considers how thereliefs should be used efficiently for income tax and capital gains tax and how they should be reported for self assessment. It does not cover remittance basis users. For this, see Simon’s Taxes E4.1323.
HMRC guidance on a country by country basis is given in DT2140PP.
Before claiming relief for foreign taxes suffered, you should note that theindividual can only make a claim if they have taken all reasonable steps to have their foreign liability reduced to a minimum.
This includes claiming, or securing thededuction of, all allowances, reductions, reliefs and deductions which theindividual might have reasonably expected to have claimed or secured if no foreign tax relief claim was open to them.
Examples of such reliefs might be personal allowances in theoverseas country, deductions for expenses, etc.
Next, you should consider theprovisions of therelevant tax treaty. There is a list of current UK treaties in force on theGOV.UK website. You may also wish to read theStructure of a tax treaty guidance note, as this provides some help with interpretation.
You should first check that thetaxpayer falls within theprovisions of thetreaty. For instance, most treaties require that theindividual is resident in thejurisdiction, while some also have references to nationality.
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