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How is FTCR (Foreign Tax Credit Relief) calculated?

Article ID: 2698
Last updated: 03 Aug, 2020

Foreign Tax Credit Relief (FTCR) can be claimed if an individual has paid foreign tax on a source of income which is also chargeable to UK tax. You must be living (resident) in the UK, Isle of Man or Channel Islands if you want to claim Foreign Tax Credit Relief.

You can claim the lower of

  • the amount of foreign tax paid, or allowed by treaty (DTA - Double Taxation Agreement) OR
  • the amount of the UK tax chargeable on that item of income

When can you make this claim?

You can only claim FTCR if a double taxation agreement allows both countries to tax the same item of income, or, if there is no DTA in place between the UK and that country, HMRC has unilateral relief for when DTA don't exist or don't apply.This means that the foreign tax is available as a credit but only up to the limit of the UK tax charged on that foreign income or gain. Some DTA's may limit the amount of foreign tax you can claim. Limits vary from Country to Country and depend on your type of income. A link to the available tax treaties from the HMRC website can be found here.

You can't claim FTCR if a double taxation agreement

  • Exempts you from paying tax on that income in the UK, for example on a foreign government pension
  • Exempts you from paying foreign tax, for example on a foreign pension

TaxCalc will also provide you with an FTCR worksheet for each entry input into the system. To locate these, please go to Summaries > FTCR Worksheet and select the relevant entry in the list. Please refer to the HS263 Document .

Article ID: 2698
Last updated: 03 Aug, 2020
Revision: 8
Views: 4685
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