UK/US Double Taxation Relief Amount

Whats the UK/US Double Taxation relief amount? I can't work it out from the treaty.

Hi Allister Fraser,
It depends on the type of income you have received and as this has not been stated, sorry we cannot advise.
Thank you. 

 

Thanks for the reply and apologies!! RSU’s vesting in the US. Federal income tax is paid and then also pay tax in the UK. I understand the relief would be the lower of the tax paid, equivalent UK tax paid or the maximum allowed under the treaty.

Hi Allister Fraser,
Correct,  You can claim a Foreign Tax Credit of up to 100% of the overseas tax paid or an amount below that figure, that covers your UK tax liability on that income.
Thank you. 

 

Hello Admin, Please can you help with this further through an example as I am unclear the tax liability difference I am allowed to claim (putting on form under foreign earnings tax credit) Example values I am paid in US shares worth £20,000 for which I pay 48% tax at source in US through shares, and the remaining shares vest into my US account. The tax value is £9600 and shares value and tax is shown as on my payslip as notional item not paid The value is added to my overall earnings and I have total £100,000 for year for which I pay £27,432 Tax in UK plus £9200 tax in US for total £36,632 I put £20,000 as Foreign Earnings and calculate tax liability difference as: Tax on £100,000 earnings in UK (inc Foreign Income) = £27,432 Tax on £80,000 earnings in UK (minus Foreign Income) = £19432 Difference of tax liability = £8000 I have paid £9,200 US tax and I can claim up to max of UK tax that was paid on the foreign earnings = £8000 Is this correct and is this the value I enter on Foreign tax credit on tax return? Is it also true that I cannot claim back the excess tax paid in US which is more than the tax I would have paid on the same earnings in the UK? Thanks

Hi Robert Long,
Please refer to guidance here:
Relief for foreign tax paid (Self Assessment helpsheet HS263).
Credit for foreign tax cannot exceed the UK tax due.
Thank you.