INTM167270 | UK residents with foreign income or gains: corporation tax: Loan relationships: relief for foreign tax: identification of UK tax: Example 3
From HM Revenue & Customs · International Manual
The loan relationship profit equals the amount of the credits relating to interest which has suffered foreign tax:
The figures are as in example 1 (see INTM167250) except that debits total £1,400 so the taxable profit is £500.
For the purpose of allowing credit relief in respect of the foreign interest of £500 the computation is restated to show UK tax chargeable on the credits of £500 + £600 + £800 and to show separately debits of £1,400 which are then treated as available to be set against profits of any description for that accounting period under TIOPA10/S52. Taking account of other profits for the accounting period the result would be as follows
| - | Trade | Loan Relationship | - | Property Income | Foreign dividend | Total |
|---|---|---|---|---|---|---|
| Profits | 2,000 | 500 | - | 500 | 1,000 | 4,000 |
| Restated as | Trade | Loan Relationship (i) | Other Loan Relationship | Property Income | Foreign dividend | Total |
| Profits | 2,000 | 500 | 1,400 | 500 | 1,000 | 5,400 |
| less Loan relationship debits (ii) | - | - | (1,400) | - | - | (1,400) |
| - | 2,000 | 500 | - | 500 | 1,000 | 4,000 |
Notes:
i) see note (i) to example 1.
ii) see note (ii) to example 1.