Foreign Tax Relief/Credit

[al91]

Hello,

Because of the lowering of tax thresholds and interest rates rising, I am obliged to fill in a tax return for years 2023-2024.

I have some interest payments totaling around 6k to 7k in the UK but I also have a property in Singapore that is rented. I pay the required tax there which amounts to 25% of the rental profit and I do not remit any funds back to the UK. Singapore also has Double Taxation Treaty Agreement with the UK.

Just looking at the foreign income side, can I request for a Foreign Tax Relief/Credit? If my tax bracket in the UK is in the 20% range, can I get a foreign tax relief of 20% of the rental income as it is the lower of the two taxes?

For example, if my Singapore tax is 4k (25% of 16K rental income), then could I request a foreign tax relief of 3.2K (20% of 16K) as this is lower of the two.

Is this how Foreign Tax Relief works?

Thanks in advance

[bd6759]

Basically yes.

The income is taxed in both counties. Singapore has primary rights and taxes it in full.

The UK also taxes it, but the UK tax is reduced by the Singaporean tax already paid, up to the amount of the UK liability on the same income.

[al91]

Thank you for confirming.

I've actually used an online tax service for my return, just to make sure the return was done correctly but the person on the other end looks to have put 20% of the actual tax paid in Singapore as the relief amount.

So, if the amount tax paid in Singapore is 4k, the Foreign Tax Relief has been calculated at being 800 as opposed to 3.2k. That person assured me that it was correct!

I guess it was a poor choice of an online service by me.

Thanks again though