Under most of the UK's double taxation agreement, and under the unilateral tax credit relief provisions1, credit for overseas tax paid is to be allowed against any UK income tax or corporation tax 'computed by reference to that income or gain'. This is sometimes referred to as the 'root income' principle2.
The root income principle may apply even if the person suffering the tax is different. HMRC gives the example where a foreign country taxes a settlor on the income
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Web page updated on 17 Mar 2025 16:23