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Foreign tax credit relief restriction ends

26 March 2010
Issue: 4249 / Categories: News , Capital Gains
HMRC will accept late repayment claims for 2004/05 and 2005/06

HMRC will no longer restrict the credit for foreign tax on overseas capital gains in certain situations.

Practice had been to restrict the relief where the overseas gain relates to a longer period than for the equivalent UK charge, and also where the overseas gain is greater than the UK gain.

The practices that restrict the allowable foreign tax credit relief have been withdrawn. In all cases where relief is claimed against UK tax on chargeable gains, the whole of the foreign tax will be allowable up to the amount of the UK tax on the gain, provided that the gain charged in both countries relates to the same disposal.

However, from 1 April 2010 there will be a standard limit of four years from the end of the tax year for making claims of repayments to income tax and capital gains tax, and four years from the end of the accounting period for corporation tax.

Because this leaves a very short period in which to make claims for the years 2004/05 and 2005/06, HMRC say they will accept late claims for those years or accounting periods ending on dates between 19 March 2004 and 29 June 2006, provided those claims are for additional tax credit relief resulting from this change of practice and are made by 30 June 2010.

Issue: 4249 / Categories: News , Capital Gains
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