Taxation (International and Other Provisions) Act 2010 section 138

Amount and application of the deemed tax under section 137

Section 138 explains how to calculate the amount of the deemed tax credit for special withholding tax under section 137, and what happens when that credit exceeds the person's income tax liability.

• The deemed tax amount equals the special withholding tax levied, minus any portion for which the person has already obtained double taxation relief in another territory where they were resident.
• If the person has claimed relief from double taxation in a territory outside the UK where they were resident (or treated as resident under a double taxation arrangement) during the relevant tax year, that relieved amount is deducted from the deemed tax figure.
• Where the deemed tax credit exceeds the person's income tax liability for the tax year (calculated before applying the deemed tax set-off), the excess is first set against any capital gains tax liability for the same year.
• Any remaining balance of the excess, after setting it against capital gains tax, entitles the person to a repayment of income tax.