UK tax help

Life module — Foreign income

Overview

These sheets analyse foreign income. Select
Foreign income
 from the
Insert sheet
 menu to create the
Foreign non-trading income
 and
Foreign trading income summary
 sheets.
Foreign non-trading income
This sheet analyses the different types of basic life assurance and general annuity business (BLAGAB) and long-term business fixed capital (LTBFC) foreign income, calculates the relief and takes the figures to other sheets.
Foreign trading income summary
This sheet summarises the amounts of BLAGAB and non-BLAGAB trading income and foreign tax that come from the following supporting sheets:
  • Foreign trading income fund analysis — factual basis
    : This sheet is for foreign income that is directly attributable to either BLAGAB or non-BLAGAB, and calculates the amount of available relief.
  • Foreign trading income fund analysis — apportionment basis
    : This sheet is for foreign income that is prorated between BLAGAB and non-BLAGAB on the basis of a specific percentage apportionment, and calculates the amount of available relief.
  • Non-BLAGAB overseas PE income
    : This sheet calculates the amount of available relief in respect of overseas permanent establishments of the non-BLAGAB business.

Completing the sheets

Foreign non-trading income
Where you've identified amounts within the
Income stream analysis
 or
Chargeable gains
 sheets that you want to treat as foreign income, enter them on the
Foreign non-trading income
 sheet.
The sheet has 2 tables you can use to analyse non-trading income and foreign tax related to BLAGAB and LTBFC (if you have inserted the relevant business in the computation).
The sheet calculates the taxable amount (including any foreign tax which you're claiming expense relief on). From the
Income category
dropdown list, you can select the different types of income that you want analyse, such as loan relationship income or dividend income. There's a column in the table to help you choose how to treat any foreign tax already paid in respect of the income. You can also insert additional rows in the tables.
Where you claim expense relief for any foreign tax, the application inserts a row on the relevant sheet (for example, the
Loan relationships and derivatives
 sheet).
Depending on where the foreign income derives, you'll need to insert a specific sheet:
  • From property income, insert the
    Overseas property business
     sheet.
  • From loan relationships, insert the
    Loan relationships and derivatives
    sheet.
  • From IFAs, insert the
    Intangible fixed asset
    sheet.
You'll also need to insert the
Double tax relief
sheets from the
Insert sheets
menu. These sheets further analyse the taxable amounts and foreign tax suffered.
Foreign trading income – factual basis / Foreign trading income — apportionment basis
Where you have foreign trading income relating to BLAGAB or non-BLAGAB on which foreign tax has been suffered, you'll need to analyse this income on either the
Foreign trading income fund analysis — factual basis
 sheet or the
Foreign trading income fund analysis — apportionment basis
 sheet.
On the
Foreign trading income fund analysis – factual basis
 sheet, you will enter BLAGAB relevant income and foreign tax, and non-BLAGAB relevant income and foreign tax. On the
Foreign trading income fund analysis – apportionment basis
 sheet, you will enter the amounts of relevant income and foreign tax to be apportioned between BLAGAB and non-BLAGAB, and enter the percentage apportionment at the bottom of the sheet.
The purpose of the
Foreign trading income
 sheets is to calculate the following:
  • Excess foreign tax
    : This represents the foreign tax that exceeds the relevant income multiplied by the effective UK tax rate for shareholder profits.
  • Creditable tax
    : This is the foreign tax less any excess foreign tax, reduced by the section 100 and 101 Taxation (International and Other Provisions) Act 2010 limitations. However, if you have elected to deduct all foreign tax from the income, then the creditable tax will be nil.
  • Deductible foreign tax
    : If you have elected to deduct all foreign tax from the income then the deductible foreign tax will equal the full amount of foreign tax. Otherwise this represents the foreign tax less any excess foreign tax and any creditable tax. There's a column for you to replace the amount of deductible foreign tax calculated (if, for example, the application of section 99(6) Taxation (International and Other Provisions) Act 2010 prevents the foreign tax restricted by section 100 and 101 from being deducted in full.
To prevent circular errors, the application generates the effective UK tax rate for shareholder profits using the
Populate
function.
The description for each
Foreign trading income
 sheet needs to be unique. This lets you import data into these sheets.
Non-BLAGAB overseas PE Income
Where the non-BLAGAB business includes overseas permanent establishments on which foreign tax has been suffered, use this sheet to determine the amount of foreign tax relievable in the UK. For each territory, enter the profits of the PE, the total foreign tax suffered, and the amount of that foreign tax based on profits (for example, as opposed to being taxed on an I-E basis).
The purpose of this sheet is to calculate the following:
  • Excess foreign tax
    : This represents the foreign tax that exceeds the relevant income multiplied by the effective UK tax rate for shareholder profits.
  • Creditable tax
    : This is the foreign tax less any excess foreign tax, reduced by the section 96 limitation. However, if you've elected to deduct all foreign tax from the income, then the creditable tax will be nil.
  • Deductible foreign tax
    : If you've elected to deduct all foreign tax from the income, then the deductible foreign tax will equal the full amount of foreign tax. Otherwise this represents the foreign tax less any excess foreign tax and any creditable tax. There's a column you can use to replace the amount of deductible foreign tax calculated (if, for example, the application of section 96(7) Taxation (International and Other Provisions) Act 2010 prevents the foreign tax restricted by section 96 from being deducted in full.
To prevent circular errors, the application generates the effective UK tax rate for shareholder profits using the
Populate
function.
You can import directly into this sheet.
Foreign trading income summary
The purpose of the sheet is to collate and sum the totals from the individual
Foreign trading income
 sheets. Totals are then taken to the following places:
  • Total BLAGAB and non-BLAGAB relevant income are sent to the
    DTR limitation details
     sheet for use in the section 101 limitation calculations.
  • Total BLAGAB and non-BLAGAB foreign tax deducted are taken to the corresponding
    Adjustment of profit
    sheets to reduce trading profits.
  • Total non-BLAGAB relevant income, foreign tax and creditable foreign tax are all taken to the
    Double tax relief — Other
     sheet to apply general double tax relief principles and potentially reduce the creditable foreign tax further.

This article applies to:

  • PRODUCT: ONESOURCE Corporate Tax

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