HMRC internal manual

International Manual

INTM332210 - Double Taxation applications and claims - Subject to tax: Background

The expression “subject to tax” usually means that the person must actually pay tax on the income in their country of residence.

However, a person is still regarded as “subject to tax” if, for example, he or she does not pay tax because their income is sufficiently small that it is covered by personal allowances that are available to set against liability to tax in the other country.

A person is not regarded as “subject to tax” if the income in question is exempted from tax because the law of the other country provides for statutory exemption from tax. For example

  • the income is that of a charity
  • the income is that of an exempt approved superannuation scheme (pension fund).

In such cases the “subject to tax” condition is not met and relief is not allowable.