The measure

The Government has introduced measures to extend anti-avoidance provisions in respect of double taxation schemes. The measures reinforce the UK’s current policy that relief for foreign tax should only be available where income has actually suffered double tax in the UK and in another jurisdiction.

Legislation will be introduced in Finance Bill 2014 to make clear that each loan relationship or intangible fixed asset credit is to be treated separately so that relief on each credit is restricted to the amount of corporation tax paid in respect of that credit.

The double tax relief credit will also be restricted where a repayment has been made by a foreign tax authority and arrangements are in place such that another person can receive the repayment of foreign tax paid.

Who will be affected?

Companies claiming double tax relief and/or receiving tax authority payments.


The rules apply to companies claiming double tax relief on loan relationships from 5 December 2013. If this is part way through an accounting period the period is split and profits apportioned between the two periods.

The rules apply to foreign tax authority payments made on or after 5 December 2013.

Our view

These changes put beyond doubt the double tax relief provisions operate as HMRC intended and relief is only given where tax is suffered in the UK and in a foreign territory on the same income.

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