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Foreign Tax Help...

BMACBMAC Just JoinedRegistered, MAAT Posts: 5
Hi All,

I have a client who is employed in the Gas industry and currently works in the Republic of Congo. His employer has paid tax on his behalf in the Congo and my client is looking to try and offset this against his uk tax.

Congo does not have a Dual Taxation Agreement.

The client is a UK resident and his only income is his salary. He is paid gross so has no deductions for UK Tax made. His company has paid approximately £3400 in tax in the Congo on his behalf, his UK tax liability is around £9500. Can he reclaim £3,400 as foreign tax relief as it's the lesser amount?

Comments

  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,432
    Hi @BMAC
    The Tax credit is the smaller of foreign tax paid and UK tax due on the foreign employment.
    The UK tax due is the difference between income tax due when including the foreign employment and tax due without the foreign employment (I appreciate that in your case it may just be extra tax at the tax payer's marginal rate but there could be interaction with PA etc...).
    HMRC 's Helpsheet 263 can be found here.
    Hope this helps :)
  • BMACBMAC Just Joined Registered, MAAT Posts: 5
    Hi Marie,

    Thanks for your reply.

    The clients tax liability is £9,716 for year 16/17 including foreign income (£51291), he would have zero income without the employment income so would have £0 tax liability. The amount of tax paid in Congo is approximately £3,400, as this is the lesser than the UK tax due can he reclaim this amount? If so can i do this electronically online as part of his return?

    Apologies for all the questions but I didn't have this issue last year as he was in different employment and didn't pay any foreign tax.
  • readerreader Experienced Mentor MAAT, AAT Licensed Accountant Posts: 1,042
    BMAC said:

    Hi Marie,

    Thanks for your reply.

    The clients tax liability is £9,716 for year 16/17 including foreign income (£51291), he would have zero income without the employment income so would have £0 tax liability. The amount of tax paid in Congo is approximately £3,400, as this is the lesser than the UK tax due can he reclaim this amount? If so can i do this electronically online as part of his return?

    Apologies for all the questions but I didn't have this issue last year as he was in different employment and didn't pay any foreign tax.

    Yes, the £3,400 acts as a credit on the tax return. Consequently after completing the tax return there will only be £6,316 of tax due.
    lisajayne1
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