DTR and illustration
In this lesson, you'll learn how Double Taxation Relief (DTR) works and when to apply it in your tax calculations. You'll discover the two methods—treaty relief and unilateral credit relief—and understand why overseas income must be included gross in your UK income tax computation, even though it's already been taxed
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In this lesson
- 0:00 Introduction to Double Taxation Relief
- 0:54 Treaty Relief vs Unilateral Credit Relief
- 2:11 Worked Example: Rowan's Income Tax Calculation
- 4:01 Treating Overseas Income as Top Slice
- 5:10 Applying Double Taxation Relief in Practice
About this lesson
abroad. The core technique is straightforward: DTR is always the lower of the overseas tax suffered or the UK tax on that foreign income. When calculating, treat overseas income as the top slice of your taxable income, then compare the UK tax on that income to the foreign tax already deducted. In most exam scenarios, you'll use unilateral credit relief, and you can often spot immediately which figure is lower without detailed calculations. This illustration walks through a practical example with Rowan, a UK resident with both trading profits and overseas interest income. You'll see how to gross up the foreign income, calculate total tax, and then apply DTR correctly. Understanding this concept is essential for TX (Taxation) and ATX (Advanced Taxation) papers, where overseas income questions are common.
Duration: 6m
Transcript
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