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Posted Mon, 09 Sep 2024 14:30:36 GMT by zofigan
Hi, I am writing to seek clarification on the application of double taxation relief with regard to my wife's rental income from a property in Pakistan. She is currently a UK resident and is unemployed at present. The rental income in Pakistan will be taxed at approximately 15%. From my understanding, double taxation relief will apply, meaning that the tax paid in Pakistan can be claimed as a tax credit to reduce any tax payable in the UK. Could you please confirm if this is correct? Additionally, in the event that she begins earning income in the UK in the future and her tax rate increases, would she be liable to pay the difference between the tax paid in Pakistan and the applicable UK tax rate? For example, if the tax rate in Pakistan is 15% and her UK rate is 40%, would she be required to pay the additional 25% in the UK? Thank you for your assistance in this matter. I look forward to your clarification.
Posted Mon, 16 Sep 2024 12:54:57 GMT by HMRC Admin 32 Response
Hi,
If there is any UK tax liability on the same source, then yes foreign tax credit relief can be claimed.
Yes, the extra tax would be due if the income increases.
Thank you.

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