Taxation (International and Other Provisions) Act 2010 section 44

Credit against tax on trade income

Section 44 sets out how the cap on double taxation credit relief applies specifically where the corporation tax being relieved relates to trade income.

• When foreign tax credit relief is claimed against corporation tax on trade income, the credit cannot exceed the UK corporation tax attributable to the specific income from the transaction, arrangement or asset that gave rise to the foreign tax.
• In working out the UK corporation tax attributable to that income, you must take into account allowable deductions (including a just and reasonable apportionment of shared costs) and expenses of connected companies, so far as they are reasonably attributable to the income in question.
• Trade income for these purposes broadly covers trading profits, property business profits, post-cessation receipts (other than certain legacy receipts under former ICTA section 103), overseas income not otherwise charged, and other income calculated as trade profits — but excludes income of insurance companies covered by section 99.
• A special restriction applies where the company claiming credit is a bank or is connected with a bank, under section 49 of the same Act.