A foreign tax credit (FTC) is a mechanism that helps to prevent double taxation on the same income or gains in two different countries. If a taxpayer has paid tax on foreign income or gains in another country, they may be able to claim a FTC to offset some or all of the tax owed on that income or gain in their home country.

The UK allows individuals and businesses to claim a FTC for foreign taxes paid on income or gains that are also subject to UK tax. This can help to avoid double taxation and ensure that taxpayers are not paying more tax than they owe.

To claim a FTC, taxpayers must provide evidence of the foreign tax paid, such as a foreign tax return or a receipt, and calculate the amount of the credit based on the exchange rate between the foreign currency and the GBP. The amount of the credit is generally limited to the amount of UK tax that would have been due on the foreign income or gain, so it's important to check the terms of any relevant double taxation agreements or other tax treaties to determine the allowable credit.

It's important to note that the rules for claiming a FTC can be complex, and the amount of the credit can vary depending on a number of factors, including the type of income or gain, the foreign tax rate, and the UK tax rate. It's also a good idea to seek advice from a tax professional who can help navigate the complexities of international tax law and ensure that taxpayers are taking advantage of all available credits and deductions.