Deduction relief and remittance basis

Hi, I am preparing my tax return for the tax year ended 5 April 2022 on remittance basis. I received a dividend of 10000 pounds in the tax year . It was taxed in China at the rate of 20% (I paid the tax of 2000 pounds in China). I remitted the after-tax dividend of 8000 pounds to UK. According to the DTA between UK and China. I can only claim the foreign tax credit relief of 10% of the dividend (I can only claim FTCR of 1000 pounds). I found at https://www.gov.uk/hmrc-internal-manuals/international-manual/intm161050 the following description: “If, for any reason, tax credit relief is not claimed, the foreign tax paid must be deducted from the income from the foreign source in computing the amount of the income for UK tax purposes (TIOPA10/S112-115).” It seems I can get all the tax paid in China (2000 pounds) to be deducted from the dividend in computing the amount of the dividend for UK tax purposes if I claim deduction relief, which means I only need to pay tax in UK for the dividend of 8000 pounds. Could you tell me if my understanding is correct? Thanks

Hi,
 

If you only remit part of a particular amount of foreign income, you can only claim credit for the same part (the proportionate share) of any admissible foreign tax that may have been deducted from that income. Further guidance iss available at : Remittance basis 2022 (HS264)   . Thank you.

Hi, Thank you for the reply. Could you please answer the question with yes or no according to my case? Please let me know if you need more information about it. Thanks

Hi,

We are unable to comment on hypothetical situations.

Thank you.