CGT36 Double Tax Relief

Question 1

Unilateral double tax relief is available when a….

Answer 1

UK resident individual makes a capital gain on the disposal of a foreign asset and overseas tax is paid.

Question 2

What is the amount of unilateral double tax relief?

How does it affect the CGT liability?

Answer 2

The relief is the lower of the overseas tax suffered and the UK CGT on the gain.

Unilateral relief reduces the UK CGT payable.

Question 3

Losses and the annual exempt amount are….

Answer 3

allocated to UK gains in priority in order to maximise double tax relief.

Question 4

Where tax is paid on gains at different rates due to the level of income, foreign gains are…..

Answer 4

treated as suffering tax at the highest rate in order to maximise double tax relief.

Question 5

What is deduction relief? When is it used?

Answer 5

Deduction relief is where the foreign tax is deducted when calculating the gain (rather than a deduction from tax liability such as unilateral relief).

Deduction relief is appropriate where gains have been deferred or losses are available.

Question 6

When a non-domiciled UK individual is only taxable on foreign gains to the extent they are remitted to the UK, if those foreign gains have suffered foreign tax what is the double tax treatment?

If an individual makes a gain on a foreign asset but is unable to bring the proceeds back to the UK, what happens?

Answer 6

double tax relief is available on a proportionate basis.

the gain can be deferred and is taxed in the tax year when it becomes possible to transfer the funds to the UK