LLM7090 - Double taxation relief: individual Names: making DTR claims

The Lloyd’s SA tax return

To simplify working out the amount of foreign tax in the Lloyd’s foreign tax pool, a special section (Part 4) of the Lloyd’s Pages of the SA return brings together all the elements of foreign tax suffered on Lloyd’s income for the year. By following the instructions for completing that section, the entry at 3L.78 (or 1L.78 for Trust and Estate Returns) gives the total amount in the foreign tax pool for the year. To claim relief for this pool of Lloyd’s foreign tax against UK tax (i.e. tax credit relief), Names complete the Foreign Pages of the SA return.

Where relief is claimed by deduction, this is done by including the total amount of the Lloyd’s foreign tax pool as a deduction from the trading results for the year. The Lloyd’s SA Pages have special boxes to allow Names to claim DTR by deduction. In the 2005-06 Lloyd’s Pages these boxes are at 3L.90, where the result before deduction of foreign tax is a profit, and 3L.83 where the result before deduction of foreign tax is a loss.

Tax credit relief: the SA Foreign Pages

The self assessment Foreign Pages require the taxpayer to work out the UK tax on profits arising on a country by country basis. This is incompatible with the pooling basis which operates for Lloyd’s foreign tax. Instead, Names are asked to make claims for tax credit relief for the Lloyd’s foreign tax pool as below

• Column A - enter Lloyd’s instead of the name of the foreign country where the income arose
• Column D - enter the total amount in sterling of foreign tax paid on Lloyd’s income, using the exchange rate prevailing at the date the income was received to translate the foreign tax to sterling
• Column E - enter the total profits from membership of Lloyd’s.

The Lloyd’s pool of foreign tax is then included in the total foreign tax for the year (in box 6.9) and then the standard procedures can be followed to complete the claim, bearing in mind that for tax credit relief purposes, the total profit from Lloyd’s (box 3L.91) is regarded as one item of income and foreign tax paid on Lloyd’s income is regarded as foreign tax on that item of income.

Foreign Pages Working Sheet

Names who have a choice over claiming relief by deduction or as tax credit relief may seek help in completing the Working Sheet in the Foreign Pages. The amount of foreign tax to include is the total amount of the Lloyd’s foreign tax pool for the year (box 3L.78 in the 2005- 06 Lloyd’s Pages), with no apportionment between different sources of foreign tax on Lloyd’s income. If the Foreign Pages are completed to claim tax credit relief for foreign tax on Lloyd’s income, there should be no entries (or only zeroes) in boxes 3L.83 and 3L.90 (these boxes allow Names to claim relief for foreign tax by deduction).