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Posted Mon, 08 Jan 2024 09:53:04 GMT by HK
I am filling out my Self Assessment online, and am unsure about declaring my foreign employment income. For context: I am a UK resident who was employed in Germany for 3 months last year. I paid foreign tax and filed a German tax return to claim some back. I intend to claim foreign tax credit relief (FTCR). My understanding is: - I should declare the German income in the “Employment” section (after conversion to GBP), and state that no UK tax was paid. - In the “Foreign” section, I can re-declare the German income and the foreign tax paid and then claim FTCR. The relief will be the lesser of the German tax paid and the UK tax liability. But I am not sure what figure to declare for the foreign income. My foreign taxable income was determined by the calculations for the German tax return, and it is significantly less than my wages because of employment-related expenses. So which figure should I use? 1. The “Foreign” section asks for the “taxable amount”, so should I use the figure determined by the German tax return? Then the FTCR covers the tax liability on the foreign income - this makes sense, because my tax rate in Germany was greater than my tax rate in the UK. 2. If not, my tax liability increases by ~25% - so I would have to pay additional tax on the foreign income, which was already taxed in Germany at a higher rate. So how can I ensure I am not excessively taxed here - can I deduct the employment-related expenses which were declared in the German tax return?
Posted Fri, 12 Jan 2024 13:48:18 GMT by HMRC Admin 19

You would use option 1.

Thank you.

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