---
title: "Creating a foreign tax adjustment deduction"
slug: "how-do-i-create-a-foreign-tax-adjustment-deduction"
description: "Cintra iQ enables Foreign Tax Adjustments, reducing UK tax for employees with overseas earnings. Learn how to apply these deductions effectively."
updated: 2026-07-29T07:53:18Z
published: 2026-06-10T11:23:01Z
canonical: "help.cintra.co.uk/how-do-i-create-a-foreign-tax-adjustment-deduction"
---

> ## Documentation Index
> Fetch the complete documentation index at: https://help.cintra.co.uk/llms.txt
> Use this file to discover all available pages before exploring further.

# Creating a foreign tax adjustment deduction

**Cintra iQ** has the ability to flag deduction headings as **Foreign Tax Adjustments** which allows the overall tax reported to **HMRC** (on the **FPS**) or to the employee (on the **P45** or P**46**) to incorporate this adjustment. Usually this reduces the amount of **UK** tax that an employee pays, due to paying tax overseas.

Foreign tax adjustments are included in the following reports/documents under tax:

- P45
- P60
- P32
- FPS
- Payroll analysis summary

**UK PAYE** tax will continue to be calculated without taking into account the amount of any **Foreign Tax Adjustment** and the employee’s payslips will continue to show the to date tax figure as the amount calculated prior to any adjustments. **Cintra iQ** allows for a deduction adjustment when tax has been paid on the employees earnings to another country.

## Create the ad hoc deduction definition

1. Navigate to the **Deductions Headings** definition window. Go to **Cintra iQ**: Payroll > Payroll Setup > Adjustments > Deductions
2. Click the **New** button. The **New Deduction Heading** form appears.
3. Enter the desired **Name**.
4. Select the desired **Reporting Group** from the drop-down list.
5. Select **Category: Ad Hoc Deduction**. ![](https://cdn.document360.io/fc2cda72-4645-4b36-96bf-60439ec11f11/Images/Documentation/204001066726.png)
6. Click the **Next** button. The **Ad Hoc Deduction** form appears.
7. On the **Main Setting** tab, enter the desired information.
8. On the **Other** tab, select the **Foreign Tax Adjustment** option.
9. Click the **Apply** button to save.
10. Click the **OK** button to exit. The definition is now created. ![](https://cdn.document360.io/fc2cda72-4645-4b36-96bf-60439ec11f11/Images/Documentation/204001066727.png)

## Apply the Foreign Tax Adjustment to the employee

1. Navigate to the employee's **Payroll Period Input and Corrections** form. Go to **Cintra iQ**: Employment Record > Forms > Payroll Period Input
2. Navigate to the **Voluntary Deductions** tab.
3. Right-click **New**. The **New Voluntary Deduction Record** dialogue appears.
4. Select **Foreign Tax Adjustment** from the **Select Voluntary Deduction Record** drop-down list.

> [!NOTE]
> **Note:** This was set in the Ad Hoc Deduction form’s Other tab

![](https://cdn.document360.io/fc2cda72-4645-4b36-96bf-60439ec11f11/Images/Documentation/204001066728.png)
5. Click the **Next** button. The **New Voluntary Deduction Record** form appears. ![](https://cdn.document360.io/fc2cda72-4645-4b36-96bf-60439ec11f11/Images/Documentation/204001066729.png)
6. Enter a negative value as the **Input Amount** to apply a credit to the employee.
7. Click the **OK** button. The deduction appears in the **Voluntary Deductions** tab. ![](https://cdn.document360.io/fc2cda72-4645-4b36-96bf-60439ec11f11/Images/Documentation/204001066730.png)
8. Calculate as normal.
  - The **Foreign Tax Adjustments** are displayed on the **Payment Deduction** and **Payroll Analysis** reports.
  - The **Tax** column on the **Deductions From Pay** is adjusted with the credit for the **Foreign Tax** paid in the **Gross to Net** report.
  - The **Altered Pay** report has the **Adjustment** changes and the category of the change reported.
  - The adjusted **Income Tax** figure is sent by the **RTI FPS** submission to **HMRC**.