International - Double Taxation Relief
Relief for Double Taxation
Double taxation occurs when income is taxed both by the taxpayer's country of residence and in another country where the income arises. The purpose of double taxation relief is to remove or reduce the disincentive that this double taxation represents to outward investment. It is estimated that in the tax year 1999/2000 £5.5 billion of relief will be allowed against income tax and corporation tax. Much of the double taxation relief that is allowed relates to underlying tax. This is the tax paid by subsidiary companies on the profits out of which they pay dividends.
Finance Acts 2000 and 2001 brought in far-reaching changes to the way in which the UK gives relief for double taxation to companies liable to UK Corporation Tax. A commitment was given in Parliament that the Inland Revenue would publish guidance notes on the detail of the changes as soon as possible.
These guidance notes have now been updated and incorporated in the International Manual: They can be found in the section from INTM164210 to INTM164340 that deals with dividends paid to the United Kingdom.
In addition a workshop on more specialist elements was held with business in July 2001. This covered many aspects that would not be relevant to most users of the Double Taxation manual. The notes of this workshop first appeared on the CBI website but we have been asked to make these more widely available.
These can be accessed at:
Double taxation workshop, July 2001 (PDF 62K)
Guidance on FA2005 changes is also available under Double Taxation Relief - Guidance
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