claim foreign tax credit relief

Dear HMRC I need to submit a tax return for year 2022-2023 as my total income ( foreign property rental income + UK state pension) has exceeded tax allowance. I have paid £1600 property tax to HONG KONG inland revenue for the tax year 2022-2023 because of the rental income in HK and I have worked out my payable tax to HM inland revenue is about £650. my question is can I still claim foreign tax credit relief for the £1600 as this figure is bigger than UK tax of £650? And if I can. How much can I claim back and how does it work? Is it foreign tax credit relief that I need to claim in order to avoid paying tax twice in two countries on the same taxable item? Many thanks for your help

Hi JessicaLove,
You can only claim Foreign Tax Credit Relief up to the maimum of what the UK tax is for the same source and from your figures this would only be the £650.
Any excess would then need to be recovered from Hong Kong.
Thank you. 
 

Thank you very much for your reply HMRC Admin 25. I have submitted a tax return for 2022-2023 and paid £1600 to HONG KONG inland revenue and iam about to file my tax return to the HM revenue for the same tax year. Do I choose to claim foreign tax credit relief on the tax return and do I need to provide a figure of how much I would like to claim? I have worked out my total tax due would be around £650 and I would also like to claim marriage allowance while filling the tax return online since my husband earned less than me. The new figure would be around £400 after allowance. Do I put £650 or £400 on how much I would like to claim for the tax relief or do I just put a tick on the box letting them know that I want to claim tax relief and dont need to provide a figure myself? Do I need to provide anything to support my foreign tax relief claim regarding on the tax I paid to HONG KONG inland revenue for example tax bill ? Many thanks for your help again

Hi,

Yes, you need to claim the Foreign Tax Credit Relief on the return.

As you are wanting to claim your husband's Marriage Allowance, he will need to submit the application prior to you submitting the tax retrun so that it shows in the calculation.

For the tax credit, you can only claim the amount that would be the UK tax for the same source of income which is not necessarily the total of tax paid in Hong Kong.

Thank you.

thank you again for the reply. I am filing my UK tax return and claiming foreign tax credit relief and came across with the question of:select rate of the tax credit relief allowed to set against your Liability to uk tax on that same income choose from 0%to 20%. I have already paid £1600 property tax to HK inland revenue for the residential property rental income at the rate of 15% and Hong Kong has double taxation Agreement with the UK but after searching under tax treaties.Instead of property income that I was looking for I could only found the rate of 15% and thats property income "dividends" . as I receive monthly rental income by cash should I also choose 15%? Many thanks for your help again

Hi JessicaLove,
You should select yes to declare foreign income and yes to claim foreign tax credit relief on capital gains.  
You need to declare the capital gain in the capital gains section and then also in the foreign section of fill in your return.  
As you are claiming relief for capital gains payments, the relief can be up to 100% of the foreign tax paid.  
If you are being asked to choose a percentage rate, you are in the wrong part of the tax return.  
On page 2 of 2 of foreign income details, you should tick yes to "Capital gains - foreign tax credit relief and Special Withholding Tax".  
This will bring up the section on capital gains for property.  
You should then tick the box for "Residential property and carried interest", to answer the questions on property disposal.
Thank you.

Hi thank you for your reply HMRC Admin 20. Iam not claiming foreign tax credit relief on capital gains iam claiming foreign tax credit relief on oversea residential property rental income and came across the question of select rate of percentage of the tax credit relief allowed to set against your Liability to uk tax on that same income which I paid £1600 to hk tax authority and that was property tax @15% for tax year 2022-2023 for gaining rental income only

Hi JessicaLove,
You can claim up 100% for this type of income.
However, the relief cannot exceed the actual UK tax due on the same source of income.
Thank you.