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HMRC internal manual

International Manual

UK residents with foreign income or gains: capital gains tax: Amount of foreign tax credit relief: general

Similar principles to those set out in INTM161210 onwards for Income Tax apply to Capital Gains Tax. The amount of credit for foreign tax is not to exceed the lesser of the foreign tax charged on the foreign gain and the UK tax charged on the doubly taxed gain at the taxpayer’s marginal rate.

If the foreign tax exceeds the UK tax, the excess can neither be deducted from the amount of the gain chargeable to Capital Gains Tax, nor can it be repaid.

The foreign tax should not be increased by any indexation allowance.

A taxpayer’s marginal rate for Capital Gains Tax is the rate at which the tax is charged for the year of assessment.