If you are required to deduct foreign tax from payments being made to employees sent to work abroad, whilst continuing to deduct UK PAYE, you will need to allow foreign tax credit relief. To do this, follow the steps below.
Create a pay element
If you have already created a pay element for this in the past, continue on to the next section.
Click Payroll, and then click Pay Elements.
Click New Pay Element.
Click the type drop-down, and then click Deduction.
Enter a pay element code, for example 'foreign tax'.
Ensure the following checkboxes are not selected;
PAYE
NICee's
NICer's
Click Save and Close.
Adjust the employees pay
Click Payroll, and then click Run Payroll.
Find and select the required employee.
Right-click in amend pay, and then click Add Pay Element.
Double-click the pay element created above.
Rate:- Amount of foreign tax paid by the employee.
Quantity:- Enter 1.
Click Adjustments.
Enter the foreign tax figure as a negative into the PAYE field.
Click Save and Close.
Click Save.