Foreign matters

We are aware that if foreign dividends are received by a basic-rate taxpayer usually there is no relief for the foreign tax as the ‘liability’ is covered by the notional tax credit added on grossing up.

However we know that when looking at double taxation relief it can be given when a client is entitled to the marginal age allowance.

The relief due is found by working downwards from the foreign dividend that has suffered the highest amount of tax.

We are confused as to how the actual amount of the relief is arrived at. For example our client is entitled to a foreign dividend of £559 which is grossed up to £622.

The UK tax calculated on this is given as £93.30 the foreign tax suffered is £83.85 so our tax program works out that the foreign tax relief is £83.85 but...