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HMRC internal manual

International Manual

UK residents with foreign income or gains: dividends: Paying agents - provisional credit

a) Where tax credit relief is due to an individual for foreign tax on a foreign dividend, the relief is limited to the foreign tax applicable to the dividend or to UK tax on the dividend at the individual’s marginal rate, whichever is the lower, and

b) no deduction is allowable for any excess foreign tax unrelieved by credit (see INTM165040, note 1).

For payments before April 2001 an adjustment will be necessary where a paying agent, etc. has allowed credit which differs from the credit actually due to the recipient of the income. This will happen where provisional credit has been allowed at a rate which exceeds the recipient’s marginal rate or where the recipient’s marginal rate is greater than the basic rate. Any such adjustment should be dealt with in the recipient’s HMRC office. See the examples in INTM164540.