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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
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Payment of tax: double taxation relief

TIOPA10/S105, S106

Tax credit relief

If gains chargeable to UK Capital Gains Tax or to UK Corporation Tax on chargeable gains have also been charged to tax in another country the person making the disposal may claim tax credit relief in respect of the foreign tax suffered. Such relief may be due under an article of a double taxation treaty dealing with credit relief. In the absence of a double taxation treaty or of a relevant article in an existing double taxation treaty, relief can be given unilaterally. Instructions on this subject are at INTM169010 for Capital Gains Tax and at INTM167030 and INTM167050 for Corporation Tax on capital gains. See also CG14380+.

Tax credit relief is given by deducting the relief from the tax payable.

Relief by deduction

If, a gain is chargeable to UK Capital Gains Tax or UK Corporation Tax on chargeable gains and is also subject to foreign tax but

  • no tax credit relief can be allowed (for example, because there is no net charge to UK Capital Gains Tax)

or

  • the taxpayer chooses not to have tax credit relief in respect of the transaction

a deduction should be allowed for the foreign tax in computing the gain for UK capital gains purposes. For further details see CG14410+.