INTM151050 - Double taxation: concept and principles

UK enabling legislation - relief under double taxation agreements

ICTA88/S788 provides that double taxation agreements made by the United Kingdom with any territory outside the United Kingdom shall have effect for the following purposes:

1. for relief from Income Tax or Corporation Tax on income,
2. for charging United Kingdom source income arising to non-residents,
3. for determining the income to be attributed to non-residents and their branches etc. in the United Kingdom and to United Kingdom residents who have special relationships with non-residents, and
4. for giving non-residents the right to a tax credit on distributions made by a United Kingdom resident company.

ICTA88/S788 refers to Income Tax and Corporation Tax in respect of income or chargeable gains. TCGA92/S277 extends the meaning of income and Income Tax to cover capital gains and Capital Gains Tax respectively. FA93/S194 provides a similar extension for Petroleum Revenue Tax.

Double taxation agreements made under Section 788 are of two kinds

1. comprehensive agreements, which deal with income of all descriptions and capital gains, and
2. limited agreements which only deal with shipping and/or air transport profits.

Double taxation agreements are incorporated as Schedules to Orders in Council and are published as Statutory Instruments. See INTM157020.

A more detailed description of the contents of a double taxation agreement is given in INTM153010 onwards. The full text of individual agreements along with a summary is provided at DT2100 onwards. The text of the agreements which have most recently entered into force is to be found on the International internet site.