by Asim Abbas
11 November 2026 
Double taxation relief: how to avoid paying tax twice
Double taxation relief: how to avoid paying tax twice
If you have income taxed in another country and you’re also taxed in the UK, double taxation relief stops you paying full tax twice on the same income.
- The UK has double tax treaties with most countries
- Foreign Tax Credit Relief reduces UK tax
- Relief is limited to the UK tax on that income
- Claim on the SA106 pages of your return
Relief comes from tax treaties and from UK rules on foreign tax credits. How it works depends on the type of income and where you live.
This guide explains the main forms of relief and how to claim them.
How double taxation happens
Countries usually tax income arising within their borders, and also tax their residents on worldwide income. A UK resident with a property in Spain, for example, may be taxed in Spain on the rent and in the UK as a resident.
Types of relief
| Relief | How it works |
|---|---|
| Treaty exemption | Income is taxable in only one country |
| Reduced withholding | Treaty limits foreign tax on dividends, interest or royalties |
| Foreign Tax Credit Relief | Foreign tax paid is credited against UK tax |
| Unilateral relief | UK credit even without a treaty |
Dividend tax calculator
UK tax on foreign dividends.
How the credit is calculated
Credit is the lower of the foreign tax paid and the UK tax on the same income. If foreign tax is higher, the excess is lost. If it’s lower, you pay the difference to HMRC.
Owen, a basic rate taxpayer, receives US dividends of £2,000 with 15% US tax withheld under the treaty, £300. His UK dividend tax is 10.75% on the £1,500 above his £500 allowance, which is £161. The credit is limited to £161, so he pays no extra UK tax, but the remaining £139 of US tax isn’t refunded by the UK.
Reclaiming excess foreign tax
If too much tax was withheld abroad, for example at a domestic rate higher than the treaty rate, you may be able to reclaim the excess from the foreign tax authority using their forms and a UK certificate of residence.
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If you’re resident in two countries under their own rules, a treaty tie-breaker usually decides where you’re treated as resident, based on permanent home, centre of vital interests and habitual abode.
Pensions and employment
Treaties often decide which country taxes pensions. Government service pensions are usually only taxable in the paying country. For work abroad, short assignments may remain taxable only in the UK.
How to claim
- Report foreign income on the SA106 pages
- Enter foreign tax paid and claim the credit
- Keep evidence of foreign tax, such as tax certificates or statements
- Use HMRC exchange rates or actual rates consistently
See HMRC’s guidance on being taxed twice, our foreign income guide and our foreign income tax returns service.
What should I do next?
For each income source.
Dividends and interest.
On SA106.
Frequently Asked Questions
Do I pay tax twice on foreign income?
Usually not. Treaties and Foreign Tax Credit Relief prevent full double tax.
How much foreign tax credit can I claim?
The lower of the foreign tax paid and the UK tax on that income.
What if foreign tax is higher than UK tax?
The excess can’t be credited in the UK.
What is a certificate of residence?
An HMRC document confirming UK residence, used to claim treaty benefits abroad.
Where do I claim the relief?
On the SA106 foreign pages of your tax return.
Need help with this? Wingate Accountants offers fixed-fee online accountancy support across the UK. Call 0161 531 4179 or request a quote at wingateaccountants.co.uk.
About the Author
Ali Imran
I’m Ali Imran, an accountant at Wingate Accountants. I help sole traders, landlords and directors get their returns filed early and accurately, without the last-minute panic.
