Taxation (International and Other Provisions) Act 2010 section 143

Taking account of special withholding tax in calculating income or gains

Section 143 explains how to adjust income or chargeable gains for tax purposes when special withholding tax has been deducted abroad and a claim for relief has been made, particularly where amounts are taxed on the remittance basis.

• Where income tax is due on savings income received in the UK, the taxable amount is grossed up by adding the special withholding tax that was levied and for which relief has been claimed.
• Where capital gains tax is due on a chargeable gain received in the UK, the gain is increased by a proportionate share of the special withholding tax, calculated using the formula: SWT × GUK ÷ (G − SWT), where SWT is the special withholding tax, GUK is the gain received in the UK, and G is the total chargeable gain on the disposal.
• Where the conditions for relief are met but neither the income tax grossing-up rule nor the capital gains tax grossing-up rule applies, no deduction may be made for special withholding tax when calculating income or chargeable gains for UK tax purposes.
• These adjustments only apply where the four qualifying conditions in section 142 are satisfied and a claim for special withholding tax relief has been made.