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Foreign Tax Credit Relief

If you earn income from another country while you are a UK taxpayer, you may find yourself paying tax twice on the same income. This can happen if the foreign country charges tax first and the UK also taxes that income as part of your Self Assessment tax return.

Foreign Tax Credit Relief is designed to reduce or remove this double taxation. Instead of paying tax twice, you may be able to claim a credit for the foreign tax you have already paid, provided certain conditions are met.

If you receive foreign income, you will normally report it on the foreign income pages of your Self Assessment return. You can learn more about these pages in our guide to What is SA106 form?.

How to claim foreign tax credit relief?

To claim Foreign Tax Credit Relief, you first need to include your foreign income on your UK Self Assessment tax return. This could include overseas employment income, foreign pensions, dividends, interest, rental income, or other taxable income received from outside the UK.

When completing the foreign income section, you normally enter both the amount of foreign income you received and the amount of foreign tax that has already been deducted or paid. HMRC then uses this information to calculate the relief you are entitled to receive.

In many cases, the claim is made as part of your Self Assessment return, so there is no separate application form. However, you should keep evidence of the foreign tax you paid, such as tax certificates, statements, payslips, or documents issued by the overseas tax authority, as HMRC may ask to see them.

If you are preparing your own return, our guide on How to do tax return myself – 2026 guide explains the overall Self Assessment process.

It is also important to check whether the UK has a Double Taxation Agreement with the country where the income arose. These agreements often determine how much tax each country is allowed to charge and whether Foreign Tax Credit Relief is available.

How to calculate foreign tax credit relief UK?

The calculation is usually based on comparing two figures.

First, work out how much UK tax is due on the foreign income.

Next, compare that amount with the foreign tax you have already paid.

The amount of Foreign Tax Credit Relief you can normally claim is the lower of:

• the foreign tax you actually paid, or
• the amount of UK tax due on that same income.

For example, imagine you receive overseas rental income that creates a UK tax liability of £1,000. If you have already paid £700 in foreign tax, you may normally claim £700 of Foreign Tax Credit Relief and pay the remaining £300 to HMRC.

If instead you paid £1,400 in foreign tax but the UK tax on that income is only £1,000, your Foreign Tax Credit Relief would normally be limited to £1,000. The extra £400 cannot usually be reclaimed from HMRC, although the rules in the other country may allow a refund depending on its tax system.

Calculating the relief can become much more complicated where different types of income are involved, exchange rates need to be applied, or a Double Taxation Agreement contains special rules. Professional advice can help ensure the correct amount of relief is claimed and prevent paying more tax than necessary.

If you need help completing your foreign income pages, calculating Foreign Tax Credit Relief, or understanding how overseas income is taxed in the UK, How to authorize someone to deal with HMRC for you explains how an accountant can act on your behalf.

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