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HMRC internal manual

General Insurance Manual

Double taxation relief: foreign tax on other income: accounting periods beginning before 1 April 2000

Other income on which foreign tax is suffered

Apart from branch profits and dividends on which relief for underlying tax is available, general insurers may receive other income on which foreign tax is suffered, such as portfolio dividends, interest and rents. The same rules as apply to other companies apply to general insurers. Before 1998 there was some doubt whether ICTA88/S798 (restriction of DTR by reference to finance costs) applied to insurance companies. That doubt was removed by FA98/S103 where in the substituted ICTA88/S798 (4) there is a carve-out for insurance business.

Setting expenses against items of income

Where foreign tax (including underlying tax) has been suffered on items of income such as dividends and interest which are taken into account in arriving at a general insurance Case I profit, it has not been the practice to seek to restrict the amount of credit by reference to the net amount of income after setting expenses against it. This is in contrast with the approach to life assurance Case I basis computations (see LAM14A.52) – but see also INTM163110 and INTM163120 which apply to general insurance business.