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HMRC internal manual

General Insurance Manual

Double Taxation Relief: background: no relief for "company tax deducted"


Care should be taken to ensure that credit relief is not given for tax ‘deducted’ by countries with a corporate tax system like the pre-1965 UK system. Under that system, income tax was charged at the standard rate on company profits, and there was no further charge on distributions in the hands of the shareholder. But if the tax charged on company profits was reduced by credit relief, a shareholder liable at less than the standard rate would have repayment of tax limited to the “underlying UK rate”.

Such tax is not creditable because it falls foul of ICTA88/S790 (5)(c)(i).

The commonest countries with such systems from which companies carrying on general insurance business get dividends are Malaysia, Singapore, Jersey, Guernsey and the Isle of Man.