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Where Taxpayers and Advisers Meet

Problem with Foreign Tax Credit Working Sheet and Self Assessment

robertiac1
Posts: 26
Joined: Mon Mar 23, 2015 7:40 pm

Problem with Foreign Tax Credit Working Sheet and Self Assessment

Postby robertiac1 » Fri Dec 07, 2018 5:10 pm

In Tax Year 2017-2018 my daughter left the UK to work in Sweden for 9 months, and then returned to the UK and resumed employment here. While she was away she rented her UK house to tenants. At the end of calendar year and Swedish tax year she had to do a self-assessment and she paid tax to Sweden on the UK rental income and the Swedish Employment income.

In the UK self assessment she has filled in rental detail in the property form and the Swedish employment income and the UK employment income. She has used Foreign Page F6 to detail the foreign tax paid on Swedish employment and Swedish tax on UK rental income.

The UK self-assessment starts to work on the FTCR and then gives an error message saying it can't do it. It produces figures for TC1, TC2, TC4, TC5 Total Income and total deductions and allowances for TC16. The report says Part 3 - Calculate Income Tax due on Remaing Income - There are no figures to calculate your foreign tax credit relief from Part3.

On the manual working sheet we get stuck at Box TC19 "Additional Personal Allowance Due as a result of excluding the item of income entered in boxes TC6 to TC10".

I can find no indication on the working sheet, or the self-assessment calculations, or the HTML supporting notes for the FTCRWS of where to get this figure for TC19 or how to compute it.

Can anyone advise? Is the self-assessment calculation failing because some bit of data is missing?

Many thanks

bd6759
Posts: 2965
Joined: Sat Feb 01, 2014 3:26 pm

Re: Problem with Foreign Tax Credit Working Sheet and Self Assessment

Postby bd6759 » Fri Dec 07, 2018 8:34 pm

The UK has primary taxing rights on the rental income, so no FTCR is due.

robertiac1
Posts: 26
Joined: Mon Mar 23, 2015 7:40 pm

Re: Problem with Foreign Tax Credit Working Sheet and Self Assessment

Postby robertiac1 » Fri Dec 07, 2018 9:21 pm

Thank you for the reply. That is disappointing but fortunately the Swedish tax on the rental income was low.

I hope the UK dosen't have primary taxing rights on the Swedish employment income (which my understanding is that this has to be declared on the UK self-assessment) so would FTCR be due on the tax deducted by Sweden on that?

And can you advise or guide on what to put in box TC19 on the FTCRWS sheet?

bd6759
Posts: 2965
Joined: Sat Feb 01, 2014 3:26 pm

Re: Problem with Foreign Tax Credit Working Sheet and Self Assessment

Postby bd6759 » Fri Dec 07, 2018 11:24 pm

Taxable in Sweden, credit in UK.


I think TC19 shoud be nil. I think that is where the income was over £100K, meaning PA is reduced, but by reducing the income for the purposes of the calculation some PA becomes due. The guidance and calculation needs to consider all possible circumstances which can make it unwieldy and more confusing that it needs ot me for the vast majority of cases.

robertiac1
Posts: 26
Joined: Mon Mar 23, 2015 7:40 pm

Re: Problem with Foreign Tax Credit Working Sheet and Self Assessment

Postby robertiac1 » Sat Dec 08, 2018 10:49 am

Thank you for you help - much appreciated. For me it is a very daunting form indeed!

bd6759
Posts: 2965
Joined: Sat Feb 01, 2014 3:26 pm

Re: Problem with Foreign Tax Credit Working Sheet and Self Assessment

Postby bd6759 » Sat Dec 08, 2018 11:22 am

In this case it should be simple.

Work out the UK tax including the foreign income and work out the UK tax excluding the foreign income. The difference is the maximum FTCR you can claim.

Claim either this maximum or the amount of foreign tax paid on the earnings, whichever is lower.

Hacel
Posts: 3
Joined: Mon Oct 01, 2018 11:32 pm

Re: Problem with Foreign Tax Credit Working Sheet and Self Assessment

Postby Hacel » Tue Dec 11, 2018 3:47 pm

In this case it should be simple.

Work out the UK tax including the foreign income and work out the UK tax excluding the foreign income. The difference is the maximum FTCR you can claim.

Claim either this maximum or the amount of foreign tax paid on the earnings, whichever is lower.
This is pretty much the advice I was given when I phoned HMRC to discuss an issue with the FTCR calculation forms. The boxes don't match up for this years form/ the guidance notes and last years forms had a similar issue. HMRC were not interested in my 'bug report' and advised me as follows:

Go through and claim 0 for FTCR and this should give you an amount of additional UK tax owed. Go back to input an FTCR figure and put in the lesser of UK tax owed or the foreign tax paid. In my case HMRC wanted ~£3500 and I had paid >£4000 foreign tax and as such I claimed relief on £3500.


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