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HMRC internal manual

International Manual

UK residents with foreign income or gains: double taxation relief: Deduction for taxes

For a deduction to be given for a foreign tax, TIOPA10/S112 requires the tax to be charged on income. If a tax is not charged on income, it may be inadmissible for tax credit relief and will also not be deductible under section 112. Examples of such taxes are those charged on turnover or on the capital value of assets used in the business. A deduction for such taxes may, nevertheless, be an allowable expense in computing the income taxable in the UK. See BIM45900 onwards as regards trading income and SAIM1130 as regards savings and investment income.