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HMRC internal manual

International Manual

HM Revenue & Customs
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UK residents with foreign income or gains: double taxation relief: Credit or deduction

Relief for the foreign tax paid on a particular item of income or gain cannot be claimed partly by way of credit relief and partly by deduction under TIOPA10/S112 or S113 (see Section 112(4)(a) & 113(3)(a) & (b), the sections can only operate where a claim has not been made for credit relief that brings TIOPA10/S31 into operation). However, credit may be claimed for the foreign tax paid on one item of income or gain against the UK tax charged on that item; and a deduction may be given for the foreign tax on a different item of income or gain, in determining the amount of that item chargeable to UK tax.

However, see INTM168110 when foreign tax paid on certain foreign loan interest exceeds the amount for which credit is allowed.