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HMRC internal manual

International Manual

UK residents with foreign income or gains: corporation tax: Accounting periods of more than one year

In general the limit of credit provided by TIOPA10/S42 is to be regarded as the amount of Corporation Tax attributable to an item of income or gains for the whole of an accounting period. Where tax so attributable has to be computed separately for parts of an accounting period falling into different financial years, the resulting amounts should be aggregated for the purposes of this Section.

The amount of credit to be allowed against Corporation Tax for foreign tax charged on foreign income or chargeable gains must not exceed the lesser of-

  1. the amount of foreign tax, and
  2. the amount of Corporation Tax attributable to the doubly taxed income or gains.

The amount of credit allowable for foreign tax attributable to certain loan interest is limited by TIOPA10/S37 (see INTM168000 onwards). There are also special rules for income from loan relationships (INTM167120 onwards) and from intangible assets (INTM167470).