CG14380 - Computation: foreign tax and double taxation relief
This page will need to be updated following changes made at Budget 2024. These changes can only be made after the Finance Bill 2024 has passed into law.
Under s31 TIOPA10, if gains chargeable to UK Capital Gains Tax (“CGT”) or UK Corporation Tax on capital gains have also been charged to tax in another country, the person making the disposal may claim tax credit relief in respect of the foreign tax suffered. Such relief may be due under an article of a double taxation treaty dealing with credit relief. In the absence of a double taxation treaty or of a relevant article in an existing double taxation treaty, relief can be given unilaterally, see INTM169010 for CGT and at INTM167030 and INTM167050 for Corporation Tax on capital gains. If such a claim is made the tax credit relief is deducted from the part of the CGTor Corporation Tax payable in the UK which relates to that gain.
Under s32 TIOPA10, a non-domiciled individual chargeable on the remittance basis who makes a chargeable gain on the disposal of an asset situated outside the UK is only liable on the amount of the gain remitted to the UK, see CG25300P.
When such an individual is chargeable on the gain remitted to the UK and claims credit for foreign tax charged on the same gain, the liability in the UK will be on the sum of the amount remitted to the UK plus the foreign tax attributable to the amount remitted.
Where less than the full amount of a doubly taxed gain is remitted, or the gain actually assessed in the other country is a different amount, you may need to consider making an appropriate apportionment of the foreign tax to arrive at the amount related to the remitted gain. This amount should then be added to the amount of the remitted gain to arrive at the amount assessable. The same figure of foreign tax will be the figure allowable as tax credit relief.
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