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Foreign tax relief
Posted by Anonymous on Fri, 03/07/2009 - 07:26
I have a client who has foreign rental income. In order to do the UK tax return and due to the fact that the foreign income is assessed on a calendar year basis it means including income for the period to 5 April 2009 that has not yet been assessed to foreign tax. Can anyone tell me how to claim the double tax relief in this instance. The foreign rental income will be assessable to tax in the respective country however it won't be paid until mid 2010 by which time the UK tax return will need to have been filed. Can I make an estimate of the foreign tax payable and claim it as double tax relief with any adjustments made in the following UK tax return? Any advice welcome. Many thanks.
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Calendar year basis?
The HMRC do not allude to this and I do not know what other practices usually do. The only logical process is to use the calendar year basis, for your foreign income and expenses account. Thern you can match the foreign tax up from that year, without delay, and without any messing around. There might be an argument from HMRC that 3 months income is dropping out of account, but at the end of the day all the income is taxed.
Everyone knows 5th April is a crazy tax-year end, but HMG does not have the nerve to do anything about it.
If the figures are large, I suggest that the actual basis is followed exactly.