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HMRC internal manual

International Manual

Foreign tax paid on trade income: limitation on credit: 1998 legislation - Foreign tax paid

Where foreign tax paid (but not `spared’) in respect of foreign loan interest exceeds the amount eligible for credit relief, the excess falls to be allowed as a deduction from that interest (see Examples 1, 5 and 6 in INTM168210). In addition, relief by way of deduction is available to the UK branch of a non-resident bank which cannot obtain full credit relief for tax paid in respect of interest because the conditions laid down in ICTA88/S794(2)(c), are not satisfied (see INTM168330).