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HMRC internal manual

International Manual

UK residents with foreign income or gains: capital gains tax: Foreign taxes

Some countries do not have a specific Capital Gains Tax but charge gains made on the disposal of assets to Income Tax. Some countries regard as income what the UK taxes as a chargeable gain; for example, distributions in a liquidation. In both cases, TIOPA10 enables such foreign income taxes to be available for credit against UK Capital Gains Tax. Where the foreign country charges a gain to a Capital Gains Tax but the gain is treated as income of a UK resident recipient; for example, a dealer in investments, and is subject to Income Tax or Corporation Tax, a foreign Capital Gains Tax can be credited against the UK tax on the same income. TIOPA10/S106 provides that, if the foreign Capital Gains Tax exceeds the UK tax on the gain, the excess cannot be credited against the tax on other income.