INTM167270 - UK residents with foreign income or gains: corporation tax: Loan relationships: relief for foreign tax: identification of UK tax: Example 3

The loan relationship profit equals the amount of the credits relating to interest which has suffered foreign tax:

The figures are as in example 1 (see INTM167250) except that debits total £1,400 so the taxable profit is £500.

For the purpose of allowing credit relief in respect of the foreign interest of £500 the computation is restated to show UK tax chargeable on the credits of £500 + £600 + £800 and to show separately debits of £1,400 which are then treated as available to be set against profits of any description for that accounting period under TIOPA10/S52. Taking account of other profits for the accounting period the result would be as follows

- Trade Loan Relationship - Property Income Foreign dividend Total
Profits 2,000 500 - 500 1,000 4,000
Restated as Trade Loan Relationship (i) Other Loan Relationship Property Income Foreign dividend Total
Profits 2,000 500 1,400 500 1,000 5,400
less Loan relationship debits (ii) - - (1,400) - - (1,400)
- 2,000 500 - 500 1,000 4,000

Notes:

i) see note (i) to example 1.

ii) see note (ii) to example 1.