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The short answer
Nigerian withholding tax deducted from your fees can be set against your UK tax through foreign tax credit relief, but HMRC limits the credit to the lower of the Nigerian tax and the UK tax on the same income, and only to the extent the UK-Nigeria treaty allowed Nigeria to tax it. Where the treaty gives the UK sole taxing rights, as it generally does for a UK resident's independent professional fees without a fixed base in Nigeria, HMRC may refuse a credit and the excess has to be pursued with the Nigerian tax authority instead.
How foreign tax credit relief works
HMRC's helpsheet HS263, Relief for foreign tax paid (updated 6 April 2026), sets the basic rule. The credit is the lower of:
- the foreign tax paid, or the amount the treaty permits if that is lower; and
- the UK tax on the same income.
Tax deducted above the treaty rate is not creditable in the UK, and HS263 says it may be recoverable from the foreign tax authority. HS263 also allows you to deduct the foreign tax as an expense instead of claiming a credit, which is mainly better when you have no UK tax liability on that income.
The treaty itself, at Article 22, says Nigerian tax payable "in accordance with this Agreement" is allowed as a credit against UK tax on the same income. That phrase is the key for freelancers.
The treaty problem for freelance fees
Under Article 14 of the UK-Nigeria treaty, a UK resident's income from independent professional services is taxable only in the UK unless they have a fixed base regularly available in Nigeria. If you work from the UK with no base in Nigeria, the treaty arguably allowed Nigeria to charge nothing on your fees. A 10% deduction under Nigeria's domestic rules would then not be tax "in accordance with" the treaty, and HMRC's rules point you to Nigeria to recover it.
The position differs if:
- You had a fixed base in Nigeria, such as an office you regularly used there; Nigeria may then tax income attributable to it, and a credit can follow.
- The payment is a royalty; the treaty lets Nigeria tax royalties at up to 12.5%, so tax at or below that can be credited.
- The facts are unclear, for example you spent long periods working in Nigeria. Take professional advice.
This is the area where freelancers most often over-claim. If you include a credit HMRC later decides was not due, you will owe the difference.
Worked example
Example only, with assumed figures. A UK-resident designer licenses artwork to a Lagos publisher for a fee worth £3,000, and the publisher deducts Nigerian tax worth £150 (5%). The designer is a basic-rate taxpayer, so UK income tax on that £3,000 is £600 (20%).
| Test | Amount |
|---|---|
| Nigerian tax paid | £150 |
| Treaty limit on royalties (12.5% of £3,000) | £375 |
| UK tax on the same income | £600 |
| Credit (lowest of the three) | £150 |
The designer pays £450 of UK income tax on that income (600 - 150). Had the same £3,000 been a consultancy fee taxed by Nigeria at 10% (£300) with no Nigerian fixed base, the treaty limit could be nil, and so could the credit.
Putting it on the return
HMRC's SA106 notes for 2026 show the foreign pages using the country code "NGA" for Nigeria, with columns for the income in pounds before foreign tax, the foreign tax paid, and a box to tick to claim foreign tax credit relief. Your fees themselves are part of your business profits; where the foreign tax on them is entered is explained in HS263 and the SA106 notes, so follow those or ask your accountant. Convert both the income and the tax to pounds at the rate when the income arose. See the SA106 foreign pages and treaty credit relief in general.
Steps
- Collect the Nigerian WHT receipt for each payment.
- Decide whether each payment is a service fee or a royalty.
- Check whether you had a fixed base in Nigeria during the year.
- Work out the credit as the lowest of foreign tax paid, the treaty limit and the UK tax on that income.
- Claim on the return, keeping your working and receipts.
- For tax above the treaty limit, ask the payer and the NRS about recovery, and fix the contract so it does not recur; see Nigerian WHT on a UK invoice.
Mutual agreement if the two sides disagree
Where you believe you have been taxed in a way the treaty does not allow, Article 24 of the UK-Nigeria treaty lets you present your case to the competent authority of the state where you live, HMRC for a UK resident, whatever remedies domestic law also offers. The treaty sets no time limit for that step. It is a slow route, suited to larger sums or recurring deductions rather than a single small invoice, but it exists, and it is worth knowing before you write off a deduction.
Where Pryme fits
Keeping Nigerian receipts in naira, with each payment matched to its invoice and WHT receipt, makes the calculation far easier at year end. A Pryme Business Account holds NGN and GBP side by side, and the Finance agent can prepare a schedule of gross fees, deductions and receipts for you to check before it goes to your accountant.
Questions people ask
Can I claim Nigerian withholding tax against my UK tax bill?
Sometimes. HMRC allows a credit up to the lower of the foreign tax and the UK tax on the same income, and only to the extent the UK-Nigeria treaty allowed Nigeria to tax it.
Why would HMRC refuse a credit for Nigerian WHT?
If the treaty says only the UK could tax the income, as Article 14 generally does for a UK resident's professional fees without a Nigerian fixed base, the Nigerian tax is not tax 'in accordance with' the treaty, and HS263 says the excess may be recoverable from the foreign authority instead.
What is the Nigeria country code on SA106?
HMRC's 2026 SA106 notes give NGA as the code for Nigeria.
Can I deduct Nigerian tax as an expense instead?
HS263 allows deducting foreign tax instead of claiming credit relief, which is mainly better when you have no UK tax liability on that income.
Sources
- HMRC HS263: Relief for foreign tax paid 2026 (updated 6 Apr 2026) · accessed Oct 2026
- UK-Nigeria Double Taxation Convention (1987), in force text · accessed Oct 2026
- HMRC SA106 Foreign notes 2026 · accessed Oct 2026
- PwC Nigeria: Highlights of the Deduction of Tax at Source (Withholding) Regulations 2024 · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.