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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: Losses - relief under ITA2007/S64

For the purposes of calculating foreign tax credit relief, losses should be deducted in the order most favourable to the claim. Normally, this will mean that losses should be allocated first against the source that has suffered the lowest rate of foreign tax. (see the examples in INTM165240).