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HMRC internal manual

International Manual

HM Revenue & Customs
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Foreign tax paid on trade income: limitation on credit: Manufactured Overseas Dividends (MODs)

Manufactured Overseas Dividends (MOD) set-off rules should be applied wholly independently of the limitation on DTR determined by the profit arising from a transaction. For any person, the amount of DTR available should be the lower of:

  • The amount of relief available under MOD rules
  • The UK tax on the profit attributable to the foreign income

For example, if MOD rules give DTR of 70 and the amount of UK tax attributable to the foreign income totalled 75, then credit of 70 should be given against UK tax. If the UK tax figure was 60, then the credit should be 60.