Double taxation relief

Income and gains arising in another jurisdiction to UK residents may be subject to tax both overseas and in the UK. UK residents may also be subject to UK tax on dividends received from companies which have paid tax overseas.

In order to mitigate this, the UK has entered into a large number of double taxation agreements (DTAs) to reduce the incidence of double taxation. In addition, the UK has legislation to provide unilateral double taxation relief in certain situations where no DTA relief is available. The double taxation relief rules (for both DTA and unilateral relief) are in Part 2 of the Taxation (International and Other Provisions) Act 2010 (TIOPA 2010). Double tax relief is extended to capital gains tax by virtue of TIOPA 2010, s 9(2). Although it has no legal force, there is also guidance to be found in the following HMRC internal manuals: International Manual at INTM160000 onwards, and the Double Taxation Relief Manual at DT1690PP, DT2100 and DT2140PP.

Definition of double taxation

There are two types of double taxation:

•
economic double taxation, which focuses on the continuity

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