Taxation (International and Other Provisions) Act 2010 section 10

Rule 2: accrued income profits

Section 10 provides a unilateral tax credit relief for individuals who have accrued income profits on securities that are also subject to foreign tax.

• Where a person has accrued income profits on securities that would be taxed as relevant foreign income, and those securities are also liable to tax in a foreign territory, a credit against UK income tax may be claimed.
• Three conditions must be met: the person must have accrued income profits in an interest period, the interest on the securities would be taxable as relevant foreign income if received, and the person is (or would be) liable to foreign tax on the interest payable at the end of that interest period.
• The credit is calculated by multiplying the accrued income profits by the foreign tax rate applicable to the interest on those securities.
• This credit is subject to the interaction rules set out in section 11, which governs how double taxation arrangements and unilateral relief rules work together.