188体育

A taxpayer鈥檚 overseas bank deposit account yields the following amounts of interest

Year ended 5 April 1995:

拢10,000 (assessed PY1995-PY96)

Year ended 5 April 1996:

拢12,000 (foreign tax paid 拢2,400)

Year ended 5 April 1997:

拢15,000 (foreign tax paid 拢3,750)

The assessment for 1996-97 is 50 per cent (12/24 months) of the income of the two years ended 5 April 1997, as follows:

50% x (拢12,000 + 拢15,000) = 拢13,500 (Para 6(2), Sch 20)

The foreign tax attributable to the income assessed to UK tax is:

50% x (拢2,400 + 拢3,750) = 拢3,075 (Para 10(5), Sch 20)

If the interest is chargeable at a basic rate of 25 per cent, the net tax liability will be:

拢13,500 at 25% = 拢3,375, less tax credit relief (拢3,075) = net tax payable 拢300

The balance of the foreign tax paid (that is (拢2,400 + 拢3,750) less 拢3,075 = 拢3,075) goes unrelieved and cannot be repaid or set against UK tax on income from any other source. Nor is it deductible under ICTA88/S811 in computing the amount of the income chargeable to tax.