HMRC is writing to wealthy taxpayers whose SA tax return for 2023/24 included a claim for FTCR in relation to foreign tax paid on:

• employment income (letter one); or
• non-employment income, including pensions, royalties, dividends or interest (letter two).

The letter states that this is not a compliance check. Where the taxpayer has an agent, the agent will receive a copy of the letter. 

Action required by HMRC

Before making a claim for FTCR in their tax return for 2024/25, and in any returns for future tax years, the taxpayer is asked to check:

• that they meet the criteria; and
• the terms of the DTA between the UK and the country where the foreign tax was paid. 

If the taxpayer finds that they have made an error in their tax return for 2023/24, they should amend their return. HMRC says that if it later finds errors in the tax return, any disclosures made by the taxpayer from that point onwards will be treated as prompted. This could increase the amount of any penalty charged.  

Although not addressed in the letters, errors in tax returns for 2022/23 and earlier can be corrected by following HMRC’s guidance at the link above under “If you’ve missed the deadline to change your return”.  

Criteria for making a claim 

For a claim for FTCR to be valid, it must be the case that:  

• the taxpayer is UK resident;
• they have paid tax on their foreign income under the other country’s law; and
• the amount of FTCR claimed is not more than the UK tax they would have paid on the same income. 

Terms of the DTA 

The letter sets out the following key points to bear in mind when applying the terms of the relevant DTA to the taxpayer’s circumstances: 

• Employment income: 
• All references to “employer” in the DTA must relate to the company that paid for, and took the risks relating to, the activities of the taxpayer’s employment. This may not be the taxpayer’s formal legal employer or the company they signed a contract of employment with.  
• The UK/US DTA only applies to US federal tax, not state taxes. The taxpayer will need to consider making a claim for “unilateral relief” on their SA tax return if they have paid any state taxes. HMRC has published guidance on unilateral relief at INTM161030. 
• The taxpayer can't claim FTCR if the other country doesn’t have the right to tax their employment income. In this case, the taxpayer may be able to claim tax relief in the other country. 
• If the claim also relates to non-employment income, the taxpayer should check the terms of the DTA relating to that type of income. 
• Non-employment income:  
• Relief for foreign interest is generally disallowed. 
• Relief on dividend income is generally restricted to a specific rate, as set out in the relevant article of the DTA. 

Contacting HMRC

The letter includes contact details for HMRC, including a dedicated phone line. The phone line will close on 31 January 2026.  

The letter refers the taxpayer to the following sources of information: 

• Self Assessment: Foreign (SA106) - GOV.UK 
• Tax treaties - GOV.UK 
• YouTube videos: 
• Do I need to declare foreign income to HMRC? 
• Double Taxation Relief and foreign income 
• The Common Reporting Standard and what it means for your foreign income