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HMRC internal manual

International Manual

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HM Revenue & Customs
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UK residents with foreign income or gains: double taxation relief: ICTA88/S794 - exceptions

Exceptions to the Residence Requirement

The following exceptions to the rule that the claimant must be resident in the UK are provided by statute:

  1. Isle of Man and Channel Islands

Under TIOPA10/S28, unilateral relief for tax paid under the laws of the Isle of Man or any of the Channel Islands may be allowed if the claimant is resident either in the UK or in the Isle of Man or the Channel Islands as the case may be. (See also INTM161120 paragraph (a), which deals with the modification of the `source rule’ in such cases.)

  1. Certain employees

Under TIOPA10/S29, a person receiving income from an office or employment, the duties of which are performed wholly or mainly in a foreign country, can obtain unilateral relief for tax levied in that country against UK tax charged under ITEPA03/S6 on the same income, whether he is resident in the UK or that country. Thus officers of the Crown and employees of UK employers, who are chargeable under ITEPA03/S6 in the UK but are resident in another country where their duties are performed, can obtain relief for the tax payable in that country.

  1. UK branch of a non-resident bank (for accounting periods ending before 21 March 2000)

Under ICTA88/S794 (2)(c), a UK branch of a non-resident bank could obtain tax credit relief for foreign tax paid on interest on certain foreign loans, subject to the limit of relief then imposed by ICTA88/S797 (see INTM168000 onwards). Claims to relief should be considered under INTM168310 onwards.

  1. UK branch of an overseas life insurance company(for accounting periods ending before 21 March 2000 - see e) below for later accounting periods)

Under ICTA88/S794 (2)(d) (introduced by FA93/SCH9/PARA13), a UK branch of an overseas life insurance company may be allowed credit relief for foreign tax paid on the branch income or gains. Relief is due only for third country tax (that is, not for tax paid in a country in which the company is liable to tax by reason of domicile, residence or place of management). The relief must not exceed what would be allowed to a UK resident insurance company which had the income or gain in question (for example, the foreign tax for which credit is allowed must not exceed what would have been payable under an agreement, if there is one, between the UK and the country in which the income or gain arises). There is further guidance on ICTA88/S794 (2)(d) in the Life Assurance Manual.

  1. UK branch of an overseas company, including UK branches of non-resident banks or life assurance companies (for accounting periods ending on or after 21 March 2000)

Under TIOPA10/S30, a UK branch of an overseas company may be allowed credit relief for foreign tax paid on the branch income or gains. Relief is due only for third country tax (that is, not for tax paid in a country in which the company is liable to tax by reason of domicile, residence or place of management). The relief must not exceed what would be allowed to a UK resident company which had the income or gain in question (for example, the foreign tax for which credit is allowed must not exceed what would have been payable under an agreement, if there is one, between the UK and the country in which the income or gain arises).