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HMRC internal manual

International Manual

Double taxation: concept and principles: UK legislation - unilateral relief

TIOPA10/S18 allows unilateral tax credit relief to be given against United Kingdom taxes for foreign taxes imposed in a country with which the UK has no double taxation agreement.

Unilateral relief under S18 can only be given by way of credit for foreign tax payable under the law of the relevant country. Part of the income cannot be taken out of assessment. In broad terms credit is limited to amount that would be due if a treaty were in existence.

TIOPA10/S25 provides a restriction to credit relief under S18. It provides that where a double taxation treaty would allow relief in respect of an amount of tax which would otherwise be payable under the law of the foreign country, then credit by way of unilateral relief shall not be allowed in those circumstance.

Credit is also not allowed where:

  • The taxpayer is not UK resident (TIOPA10/S26): nor
  • The taxpayer elects for the credit not to be allowed (TIOPA10/S27).