UK tax year-end planning: foreign tax credits

We normally advise clients to consider making an upfront UK tax payment before 31 December in the calendar year they receive income or realise a gain where there has been no withholding tax or payment on account covering the UK tax liability.

Last updated: 13 February 2019

This applies to most clients who are on the “paid” basis for foreign tax credit purposes. For those clients on the “accrued” basis it can be good tax planning to time the income payments or capital transactions to take place within the start of the calendar year but before 6 April 2019. This is so that the UK tax accrues within the same US tax year for that item of income or gain, ensuring foreign tax credits are offset in the same US tax year that an item of income or gain is generated.

What should I do?

Anyone who claims the accrued basis for foreign tax credit purposes should consider timing income payments or capital transactions to take place before 6 April 2019 so that the foreign tax credit matches up with the income or gains.

Follow the relevant links below to read more:

We recommend that individuals seek professional advice where appropriate before taking any action, so please fill out the form below if you have any questions. 

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