RDRM32160 - Remittance basis: Accessing the remittance basis: Effect of Double Taxation Agreements on amounts charged: Foreign tax credit relief

Where a UK tax resident has income or foreign chargeable gains from a country with which the UK has a Double Taxation Agreement (DTA), the terms of that double taxation treaty must be taken into account when calculating the amount of UK tax payable on that income - see INTM160000+.

In the same way as the majority of UK resident taxpayers, an individual who elects to pay UK tax on the remittance basis may be entitled to set certain amounts of foreign tax against their liability to UK tax on that same income or gain.

Note 1: Each case must be considered on its particular facts, and the treatment of particular amounts will depend on the precise terms of the relevant DTA.

Note 2: Where a remittance basis taxpayer only remits part of an amount of foreign income or foreign chargeable gains on which foreign tax credit relief is available, they can only have credit for the appropriate percentage part of the foreign tax.

For example, Rob has foreign income of £1,000 on which he has paid ‘admissable’ foreign tax of £100. He has £900 available to be remitted but he remits only £450. Rob may claim credit for half the foreign tax (£50). If, at a later date, Rob remits the remaining £450 he can then claim the remaining £50 credit against his liability to UK tax on the remitted income for the foreign tax he has already paid.