At the peak of the January rush, I've been approached by an old friend to complete a return including overseas income.
As a 'first' for me, it was back to the textbooks from a year or ten ago, but not quite sure if my calcs are correct
His earnings are in Kazakhstan (gas/oil based occuaption), paid in USD and taxed at source.
Gross Income £79k, Tax at source £9k.
After running calcs of FTCR, I came to a figure of £3600, but using this in a UK tax calulation would mean the client would pay a further tax in January of £16600..Total tax paid would then equate to - £16600 + £9000 = £25600.
While if I used a normal UK tax calculation, total tax due on earnings - £20250, less the £9k as tax "already paid", the liability in January would be £11250
The part where I have come unstuck, is why the additional Tax liability of £5350 when I use the foreign Tax credit caculation in comparison to the UK calulations??
Any advice much appreciated at this time of the month!