Background

As mentioned in ¶173-615, the credit for foreign tax is not to exceed the UK corporation tax chargeable on the foreign income to which it relates. As corporation tax applies at a single rate, the foreign tax credit is limited to the amount found by applying that rate of tax to the foreign income. Where the foreign income is from investments, i.e. ‘pure income profit’, the restriction is a simple calculation as the full amount of such income enters into the UK tax computation, with no deduction for expenses.

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