Check if your employee can claim foreign tax credit relief
If you're an employer based in the UK, find out if an employee is eligible for tax relief through an Appendix 5 arrangement if they've paid tax abroad on their income.
If you’re an individual, you can find information about relief for foreign tax paid.
If your employee has to pay foreign tax on their earnings, you may be able to provisionally give them foreign tax credit relief by applying for an Appendix 5 arrangement. This would allow you to set that foreign tax off against UK tax due under PAYE (Pay As You Earn).
The employee can only claim relief up to the amount of Income Tax the employee would have been liable to pay in the UK.
Who can claim
If you’re an employer based in the UK, you may be able to operate foreign tax credit relief if you:
- send an employee to work abroad
- deduct UK PAYE using your employee’s UK tax code
- need to deduct foreign tax from your employee’s pay
You can check the list of tax treaties in place with the country the employee is working in to find out if you’ll need to deduct foreign tax from their pay.
If the country your employee is working in does not have a tax treaty in place with the UK, they still may be able to claim foreign tax credit relief.
If your business already has authority from HMRC to apply foreign tax credit relief for an employee in a country, you can apply foreign tax credit relief for any other employees you send to work in that country.
You must include details of any additional employees you operate foreign tax credit relief for in the update you send to HMRC every 3 months.
How to claim
To claim foreign tax credit relief for an employee you must:
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Provide updates to HMRC every 3 months.
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Report foreign tax credit relief at the end of each tax year.