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HMRC internal manual

International Manual

HM Revenue & Customs
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UK residents with foreign income or gains: income tax: Statutory provisions

TIOPA10/S31(2) and TIOPA10/S36 provide that where tax credit relief is claimed

  1. no deduction is to be given for any foreign tax in arriving at the measure of the foreign income for UK tax purposes, and;
  2. the limit of credit is to be determined by reference to the taxpayer’s `marginal’ rate (see INTM165040, note 2).

Detailed guidance on these provisions are given in INTM165030 onwards.

TIOPA10/S37 contains rules which limit the amount of credit allowable for certain foreign loan interest and modify the method of computing the measure of such income for UK tax purposes. The scope of the legislation is designed to catch any person, by whatever description called, who in effect behaves like a banker in his lending operations. Full instructions are contained in INTM168000 onwards.

TIOPA10/S41 provides an overriding limit to the total credit which can be allowed against Income Tax. For any year of assessment the credit to be allowed must not exceed the total income tax payable by any person for that year on charges.