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HMRC internal manual

International Manual

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HM Revenue & Customs
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Foreign tax paid on trade income: limitation on credit: 1998 legislation: Spared tax

In the case of foreign tax which is `spared’ under the terms of a double taxation agreement ICTA88/S798(3), ICTA88/S798(4), and ICTA88/S798A(2) for interest within the 1998 legislation, provide that the UK measure of the foreign loan interest is to be increased by the lesser of:

  1. 15 per cent of that interest; and
  2. the actual amount of `spared’ tax for which credit is available under the relevant double taxation agreement.

(See Examples 2,3 and 4 in INTM168210.)