The letter sets out the conditions for claiming foreign tax credit relief (FTCR) and encourages the taxpayer to check the terms of any double tax agreement (DTA) between the UK and the other country to ensure that their claim is valid.  

HMRC reminds the taxpayer that a claim for UK FTCR cannot be made if the DTA does not give the other country the right to tax the income. In this case, where the taxpayer has suffered tax under the other country’s domestic rules, relief should be claimed in that other country. For employment income, HMRC says that references to “employer” in the DTA are to the entity that paid for and took the risks relating to the employment. This may be different from the entity the taxpayer signed a contract of employment with.  

The letter also provides guidance on taxes paid in the United States (US). HMRC points out that the UK/US DTA only applies to US federal tax and does not apply to US state taxes. This means that the taxpayer will need to claim unilateral relief for any US state taxes paid on their employment income.  

If the taxpayer finds that they have made a mistake in their tax return, HMRC says they should follow the guidance on GOV.UK for amending the return. The deadline for amending the return for 2022/23 is 31 January 2025. HMRC warns that additional tax, interest and penalties may be payable if HMRC opens a compliance check and finds an error in the tax return.  

Further information 

• Template letter provided by HMRC
• HMRC’s list of tax treaties
• HMRC’s guidance on tax on foreign income
• HMRC helpsheet HS263 – relief for foreign tax paid
• HMRC’s guidance in its international manual on claiming unilateral relief