Computation of income subject to foreign taxU.K.
1(1)Section 795 of the Taxes Act 1988 is amended as follows.
(2)In subsection (2)(b) (dividend to be treated as increased by any underlying tax taken into account in determining credit to be allowed in respect of the dividend) after “increased by” insert “ —(i) ” and after “in respect of the dividend” add— “, and
(ii)any underlying tax which, by virtue of section 799(1)(b) or section 799(1B)(b), does not fall to be so taken into account”.
(3)After subsection (3) insert—
“(3A)The amount of any income or gain shall not be increased under subsection (2)(b)(i) above by so much of any underlying tax—
(a)as represents an increase under section 801(4B); or
(b)as represents relievable underlying tax (within the meaning of sections 806A to 806J) arising in respect of another dividend and treated as underlying tax under those sections.”.
(4)This paragraph has effect in relation to dividends paid on or after 31st March 2001 by a company resident outside the United Kingdom to a company resident in the United Kingdom (whenever any such dividend as is mentioned in section 801(2) or (3) of the Taxes Act 1988 was paid).