Income Tax (Trading and Other Income) Act 2005 section 189

Relief for unremittable amounts

Section 189 sets out how relief is given when a trader's income includes amounts that cannot be transferred to the UK, ensuring that tax is not charged on profits the trader cannot actually access.

• Where trade profits include an unremittable amount as a receipt, the trader may deduct that amount from those profits, but the deduction cannot exceed the profits or create a loss.
• If the unremittable amounts (including any brought forward from the previous period) exceed the profits, the excess is carried forward to the next accounting period.
• Where the trader has no profits in a period but an unremittable receipt has been included, the full unremittable amount (plus any brought forward) is carried forward to the next period.
• When amounts carried forward reach a period in which the trader has profits, a deduction is allowed against those profits, again limited to the amount of the profits.