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HMRC internal manual

International Manual

UK residents with foreign income or gains: double taxation relief: Repayment, carry forward

Foreign tax which, for whatever reason, cannot be allowed as credit against UK tax on the same income cannot be repaid. Nor can it be deducted from the income if any part of it has been allowed as credit (INTM161090); or carried forwards or backwards for credit against UK tax for other years (since UK tax charged for those years will not be charged on the same income, even if it is charged on income from the same country or even from the same source). However, this latter rule is modified in the following circumstances:

  1. where the foreign tax is “eligible unrelieved foreign tax” arising on a dividend received by a UK company (see INTM164240, INTM164310, INTM164320 and INTM164340); or
  2. where foreign tax is payable on the profits of an overseas branch and not all of it can be utilised by way of credit against the UK tax chargeable on that year’s branch profits (see INTM163040).

Under no circumstances can foreign tax be allowed as credit against Class 4 National Insurance Contributions.