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This example relates to E6.125 and E6.126.

Example 1—amount A and amount B under ITA 2007, s 811

Jean-Claude is resident and domiciled in France. He owns a property in the UK from which he receives taxable rental income of £7,000 per annum. He also has a UK bank account on which the amount of interest is £21,000 per annum and he receives dividends from a UK company of £8,500.

The UK bank interest is paid gross and can therefore be ignored when calculating the maximum UK liability. He will be treated as having paid tax of £743.75 (£8,500 at 8.75%) in respect of the dividends.

His UK income tax liability in 2022/23 will be (under ITA 2007, s 811):

Amount A – tax treated as paid in respect of dividends: £743.75

Plus

Amount B – tax in respect of other income (ignoring personal allowances)

= Rental income (7,000 @ 20%): £1,400

Maximum tax liability: £2,143.75

There will be no liability in respect of the bank interest. However, Jean-Claude will