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HMRC internal manual

International Manual

UK residents with foreign income or gains: double taxation relief: ICTA88/S794

Residence Requirement Credit for foreign tax against UK tax on income etc. may only be given to a person who is resident in the UK in the year of claim (TIOPA10/S26). There are five exceptions to this rule, set out in INTM161200. Relief may be claimed by individuals, companies, corporations or societies. Even if a person is a resident of another country for the purposes of a double taxation agreement (see INTM153050), if he is resident in the UK under UK domestic law he is entitled to claim credit for foreign tax charged on income which is charged to UK tax.

Where UK residents are partners in a foreign partnership, each partner individually will be allowed credit for the foreign tax attributable to his share of the partnership income against the UK tax charged on his share of the foreign partnership income on which foreign tax has been borne. (See also INTM163130 and DT1750.)

For periods before 21st March 2000, except for the UK branch of a non-resident bank or of an overseas life insurance company (see INTM161200 paragraphs (c) and (d)), no tax credit relief was allowable against the UK tax charged on any foreign income derived by the UK branch of a non-resident enterprise (See BIM45901). Relief for foreign tax may be given by deduction (INTM161050 onwards).

For periods after 21st March 2000, the treatment previously given only to UK branches of foreign banks and life insurance companies is extended to the income and gains of branches and agencies of non-residents generally (see INTM168340).

As regards credit claimed against Capital Gains Tax by individuals ordinarily resident but not resident in the UK, see INTM169050.