Joyce Chan

Hello, I am a UK tax resident and am self-employed as a sole trader, providing services to clients in Hong Kong. As a result, I have paid tax to the Hong Kong Inland Revenue Department (HKIRD). However, due to differences in accounting methods, the income reported on my UK tax return differs from that reported on my Hong Kong tax return. For the 2023-2024 tax year, the total income of GBP 50,000 (converted from HKD) is reported in Hong Kong using the accrual basis, but under the UK tax return using the cash basis, only GBP 24,000 falls into the 2023-2024 tax year, with the remaining GBP 26,000 being accounted for in the 2024-2025 tax year under the UK tax return. I have already paid a total of GBP 2,500 in tax to the HKIRD for the 2023-2024 tax year based on the full GBP 50,000 income. My question is: When applying for Foreign Tax Credit Relief (FTCR) to offset the tax paid in Hong Kong, can or should I break down the paid tax of GBP 2,500 into the two different UK tax years (2023-2024 and 2024-2025), considering that part of the income falls into the UK tax year 2024-2025? Or should I claim the full GBP 2,500 tax credit in the UK 2023-2024 tax year? I would appreciate any guidance on how to correctly allocate the tax paid in Hong Kong between these two tax years when claiming FTCR. Thank you in advance!