Foreign Tax Credit Relief

Foreign Tax Credit Relief is something you can claim if you have already paid foreign tax on income that’s normally taxed in the UK. Sometimes, the income and gains you make can be taxable in more than one country. For example, if you live in the UK and make some money from a job abroad, your foreign income can end up being taxed by both the UK and by the country where your income is from.

You can usually claim tax relief to get some or all of this tax back. How you claim depends on whether your foreign income has already been taxed or not. Foreign Tax Credit Relief is one method you can use, and it usually happens if you are:

• A UK tax resident (HMRC taxes your foreign income as well)
• A non-resident but living in the UK and already transferred (remitted) that income to the UK

In either case, claiming this type of relief usually lowers your UK tax bill by the amount of foreign tax that you’ve paid. In some cases, it can be less.

How do I claim Foreign Tax Relief?

You can claim Foreign Tax Credit Relief when you report your overseas income in your Self Assessment tax return. You must register for Self Assessment before the 5th of October in any given year, and pay by 31st January the year after the tax year you’re paying for.

However, you don’t need to fill in a tax return if all the following apply:

• Your only foreign income is dividends
• Your total dividends (including UK dividends) are less than the £1,000 dividend allowance
• You have no other income to report

How much relief will I get?

How much relief you get depends on the UK’s double-taxation agreement with the country your income is from. You usually still get relief even if there is not an agreement – unless the foreign tax does not correspond to UK Income Tax or Capital Gains Tax.