Foreign Income 19 - Do you wish to claim foreign Tax Credit relief

If you choose 'yes' you'll be asked to choose a % rate of relief that is 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 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

If a double taxation agreement does exist check what it says and how it applies to you. If foreign tax credit relief cannot be claimed for some or all of the foreign tax you'll have to consider making a claim to the tax authority of the other country. You can find information about this claims process in the Double Taxation Relief Manual

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.

Helpsheet 263 - Calculating foreign tax credit relief on income gives further information about foreign tax credit relief.