Reporting US taxes: Apportioning additional taxes paid to the UK tax year

Hoping for some help with an issue that I've been struggling with for the Self Assessment. The US tax year is 1 January to 31 December 2022 and then 1 January to 31 December 2023. The UK tax year is 6 April 2022 to 5 April 2023. When I filled in my US tax return for 2022, I owed some tax, which I paid in a lump sum within the UK 2022/23 tax year. This happens to a lot of US taxpayers. The question I have is: regarding the foreign income section of the self assessment, how do I know how much of what I owed in US tax that I paid in a lump sum represented what was underpaid specifically during the UK tax year of 6 April 2022 to 5 April 2023? Because surely some of it represented tax that was underpaid from 1 January to 5 April 2022 and some of it from 6 April 2022 to 31 December 2022? Is it just proportionate to the amount extra paid? So say if it was $X owed in taxes and 271 days of the UK 2022-23 tax year lie in the 2022 US tax year, is it just 271/365 of $X? And if so, what month for the currency conversion do you use to report that in pounds? Is it just the conversion at the time you paid the lump sum, or, if it is proportionate to 271 days, do you calculate the appropriate conversion rate for each day of the year? Any guidance would be appreciated. Thank you.

Any help with this matter would be really appreciated. Thanks!

Hi ilk0101,
You take the figures for the tax year 1 Jan to 31 Dec 22 and put into your 22/23 tax return and 1 Jan to 31 Dec 23 into your 23/24 tax return and so on.
There is no need to apportion the US figures to fit the UK financial year.
You claim a credit again the chargeable UK tax, of up to 100% of any overseas tax paid.
HMRC cannot advise you on the tax payable in the USA in a US tax year, for that you will need to contact the IRS.
Any overpayment or underpayment of US tax will need to be addressed by the IRS, which should allow you to declare the correct tax figure in your Self Assessment tax return.
Thank you.


 

Thank you for your help. I really appreciate your time, although I admit I am still a little confused. Just to clarify- when you say 'figures', does that mean that in my 22/23 UK tax return, I should include all of the gross income received in the USA during 2022, including from 1 Jan to 5 April 22, even though that money wasn't actually earned or received in the 22/23 UK tax year? Or are you only talking about the tax which was paid in the 1 Jan to 31 Dec 22 USA tax year? Thank you!

Hi,

The income received in the tax year 1 January to 31 December in the US, is treated as being the income received 6 April to 5 April. This means you do not need to apportion to try and match the UK tax year.  

Under the terms of Self Assessment, we do not provide an official exchange rate and the onus is on the individual to use a just and reasonable exchange rate. For your convenience, there are exchange rates here:

Exchange rates from HMRC in CSV and XML format

You can see older rates here:

Foreign exchange rates and spot rates: 1 January 1989 to 31 March 2009

You are free to use any of the supplied rates or one of your own choosing. 

Thank you.

I have a similar query to the above included in the thread regarding using Calendar Year Figures to the 31 December 2023 on a US W2 Form (P60 in the UK) on a 23/24 UK Tax Return and if apportioning the income is required? Does the legislation below contradict the above guidance? INTM161220 - UK residents with foreign income or gains: double taxation relief: Foreign tax Just looking for clarification as we have received guidance to following the legislation and to apportion the foreign income? Thank you

Hello HMRC team,
I was,working in the US for quite sometime and kept my savings in the US bank account.
Few years back, I moved to the UK and in order to buy a house in the UK, moved some of my savings to my UK bank account during the current financial year.
When filing the UK self assessment for this financial year where I had moved my US savings to UK, do I need to declare the total amount brought into UK under Foreign income declaration?
Please guide how and where to input these details, so that I don't moss anything.
Thanks very much

Hi ME123456,
No, it just makes it easier to report.
If you have already been reporting using the method at intm161220, you must continue to do so.
Thank you. 

Hi Hello_ World,
You will need to declare this income in the foreign section of the return. You can see guidance here:
Tax on foreign income
Thank you.

Hi all, I have a somewhat similar query so thought I would ask here. I'm a UK resident with income from a UK pension in the 20% tax bracket. I have inherited an individual retirement account (IRA) in the United States. I understand the required minimum distribution rule. If I took out, say $175k in one year my understanding is that I can pay taxes either in the United States or in the UK. If I elected to pay tax in the United States, would I have to declare income in the UK and pay all of my taxes in the US? Or am I right in thinking that could I pay US tax on the amount coming from the United States and repatriate it to the UK with no tax/income implications here (ie I would remain in the 20% bracket)? Thanks.

Hi Kevin,
If you are a UK resident and domiciled you are liable on your worldwide income and would need to declare any withdrawal here.
As a non government pension, no tax would be deducted in US.
Thank you.