Foreign Income 20 - Rate of tax credit relief allowed

Because you selected 'yes' you must now say what percentage rate of relief, the foreign tax deducted, that you want to set against your liability to UK tax on that same income.

Foreign Tax Credit Relief is not always available, or may not be available on the full amount of foreign tax you've paid. Relief is subject to the following rules:

1. you must be a UK resident
2. the income must arise in the foreign country and be properly chargeable under the foreign country's law
3. the amount of Foreign Tax Credit Relief must not exceed the UK tax on the same item of income or gains
4. where a Double Taxation Agreement exists between the UK and the other country, the amount of foreign tax available for the relief is restricted to the minimum foreign tax payable under the terms of the Agreement

To check if the UK has entered into a Double Taxation Agreement with the foreign territory you should go to Tax treaties for further information.

If a double taxation agreement does exist you must check what it says and how it applies to you. If you can claim foreign tax credit relief, use the list to look up the maximum percentage rate of tax for the income that you have and select that rate from the drop-down list.

The automatic calculation of foreign tax credit relief will use this figure to make any necessary adjustments to the amount of foreign tax for which you are claiming a credit against your liability to UK tax on that same income.

If no Double Taxation Agreement exists, or the Agreement does not cover that particular foreign tax, relief is only available if the tax corresponds to UK Income or Capital Gains Tax.

Help Sheet 263 - Foreign Tax Credit Relief provides further information about foreign tax credit relief.