I have been scratching my head over this one for hours... I've read more than I ever want to about double-taxation treaties and HS263 etc.

Unfortunately, I'm still none the wiser about what to put on my UK Self Assessment for a salary I was paid by an Australian company, to an Australia bank account, taxed by the ATO while I was resident in the UK (I was teleworking).

On my self assessment form there is a "Foreign income" section where I can tick an income type called Employment, self-employment and other income which you paid foreign tax. This seems exactly what I need. The values that I can input are:

  • Income arising in sterling
  • Foreign tax taken off or paid
  • Do you wish to claim foreign tax credit relief? (yes)
  • Rate of tax credit relief allowed (0-25% in specific increments)

What is so confusing about this is the "rate allowed" seems to have no bearing on any rates relating to my Australian income.

As I understand the ATO has a base-rate of 32.5% income tax for non-residents so that's what was deducted PAYG by my Australian employer.

I understand that certain types of income have maximum tax rates that can be charges in their source countries, e.g. I think Interest can only be charged at 10% (I think this is the withholding tax rate for non-residents in Australia). But an employee salary doesn't seem to have any 'rate' associated with it in any treaty I can find.

Out of curiosity, I've experimented with choosing different values for "tax taken off" and "rate allowed" and let the HMRC SA website calculate my relief but it always comes up with... ZERO! I cannot fathom what it's trying to calculate. It doesn't seem to pay any attention to changes I make to the "foreign tax paid" at all.

As I understand I shouldn't pay tax twice on this salary. I already paid 32.5% to the ATO, so I should just pay the different to HMRC (assuming I would have paid more if I had earned it in the UK), but I can't figure out what to put in the SA form to make this happen.

Any help appreciated.


The better option is you fill in the details in the regular employment section and in the foreign income supplementary sheets fill in the section "Foreign tax paid on employment, self employment and other Income". This should be able to provide for Foreign Tax Credit. All the Best...

protected by JoeTaxpayer Jul 18 '18 at 2:09

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