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HMRC internal manual

Banking Manual

Banking surcharge: double tax relief - determining maximum double tax relief available

CTA10/S269DL

Double taxation relief (DTR) can be claimed against amounts of surcharge but only where the credit arises after the claimant company became a banking company.  Any credit for foreign tax is to be given firstly again the corporation tax for the period and any remaining amounts are allowed against the surcharge.

The following steps are required to determine DTR available for set off against the bank surcharge:

  • Determine the maximum amount of credit relief that may be due against the CT on the foreign income as prescribed in TIOPA10 Chapter 2 of Part 2 (amount X).

 

  • Determine the maximum amount of credit relief that may be due against the surcharge on the foreign income by applying the rules in Chapter 2 of Part 2 as if the references to corporation tax are instead references to the surcharge amount (amount Y).

 

  • Where the amount of foreign tax (F) on the income equals or exceeds X+Y, the amount of Y is available as credit against the surcharge levied on the company. But if F is less than X+Y then the credit against the surcharge is restricted to F minus X. So in other words credit is given for foreign tax against the CT on the income first and in any event the total credit relief must not exceed the foreign tax on the income in question.

See BM407200 for an example.