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UK Tax on Foreign Income
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If you are looking for advice on UK tax on foreign income and need to know about your domicile and resident status, read our FAQ, call our office or book an appointment or email us your enquiry.
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UK Tax on Foreign Income
If you live in the UK, you must pay income tax and capital gains tax on all your money, including foreign income. There are no exceptions, and tax rules can be confusing. The HMRC website may not provide clear guidance, which is where our tax accountant services can assist.
If you’re a resident in the UK for tax purposes, you owe tax on your worldwide income. This applies if you were born in the UK, are a British National, or plan to live here permanently. Even non-nationals who have lived in the UK for at least 15 of the past 20 tax years are treated the same way.
Specialist Non-Dom & Double Tax Treaty Advice
Filing your tax return for foreign income can be complex, and you may need help with a worldwide disclosure facility to voluntarily report unreported foreign income to HMRC. Our tax advisors make tax rules easy to understand and ensure your submissions are accurate and on time. If you need help with your tax return or a disclosure, we can assist you. For more information, visit our FAQ on UK tax on foreign income or call us today. Let our tax accountants help you stay compliant and save money!
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Your Questions - Our Answers
We are here to help you with any questions you may have
Am I required to pay tax on foreign income, and do non-residents have any tax liabilities on their foreign income?
Tax on foreign income is a complicated subject. There are two sides to this complex subject. First, if you are domiciled in the UK and living in the UK but have foreign income, you will be taxed on your worldwide income, depending on the type of income and the relevant double tax treaty statutes. Remember, not all foreign income is taxable in the UK if the double tax treaty says otherwise.
In the second scenario, you live in the UK but will leave at the end of your stay. You may have come here temporarily, or your plans may have changed after arriving in the UK. In this situation, you are resident but non-domiciled. Depending on your circumstances and potential tax savings, you can pay taxes on either an arising or remittance basis.
Now, if you are not a resident and non-domiciled but have income from UK sources, tax on UK income is treated differently; for example, you have to pay tax on income from property, but you do not pay tax on employment income (check double tax treaty).
What types of income are considered foreign income for UK tax purposes?
Taxable income is any income earned through business, trade or investment. This will include employment income, Self-employment profits, income from rent, dividends from stock investments, interest on bank deposits, royalties, pension drawdowns, social security benefits or any other income that falls under the general definition of income but is not covered by specific tax laws.
Any foreign income derived from these sources may be taxable in the UK, depending on the jurisdiction or country where the income is generated and the applicable double tax treaty with the UK. On the other hand, tax on a remittance basis is not directly related to the origin of income. Tax is only charged on the money brought into the UK by a non-domiciled person.
How can I include foreign income in my Self Assessment Tax Return?
We tend not to answer this question because of various reasons. The first reason is the complex nature of treating different foreign incomes. The complexity of understanding statutes of law related to the double tax treaty and HMRC guidance will not help the taxpayer save taxes. We fear that taxpayers will either pay double tax or too little tax, which can result in penalties of up to 100% under the requirement to correct guidance.
Although HMRC guidance is readily available and can be accessed online, it does not provide guidance on the treatment of different types of income or how to claim a foreign tax credit. Some foreign tax credits are limited to certain amounts as agreed in DTA’s. To better understand your unique situation, we recommend contacting our team of specialist tax advisors for guidance and support.
Can I amend my personal tax account for past years?
We strongly advise clients to amend their tax returns as soon as they discover any mistakes, omissions, or details that may impact their tax liability. Your intention to correct your mistake will have a greater impact on the type and percentage of penalty HMRC will charge on the outstanding tax.
There are certain time limits to correct your tax returns. Self-assessment tax returns can be amended within two years after the end of the tax year. For example, we can only amend the 2021-22 tax return until 5th April 2024. Any outstanding tax due before 5th April 2021 must be notified through a disclosure facility.
As a non-domiciled UK resident, can I choose to be taxed on the remittance basis for my foreign income?
If you are a UK resident but not UK-domiciled, the rules governing your foreign income and gains will change from 6 April 2025. For the 2024–25 tax year (the last under the old regime), non-domiciled individuals automatically benefit from the remittance basis if their unremitted foreign income and gains total £2,000 or less. This means they do not need to report or pay UK tax on such amounts. However, if unremitted foreign income exceeds £2,000, or you choose to be taxed on the arising basis, that overseas income becomes fully taxable in the UK. In practical terms, this means that all foreign earnings—such as interest, dividends, rental income, or profits from a foreign business—must be declared on your Self-assessment return, and UK tax is due at the usual rates and bands.
From 6 April 2025 onwards, the new Foreign Income and Gains (FIG) regime replaces the remittance basis entirely. Under the FIG regime, domicile no longer determines eligibility. Instead, qualifying “new residents”—those who have not been UK tax residents for at least 10 consecutive preceding years—can claim relief on foreign income and gains for up to four tax years (including the year of arrival). When relief is claimed, those foreign income streams and capital gains are exempt from UK tax, regardless of whether the funds are remitted to the UK. Once the four-year period expires, any unpaid foreign income and gains become taxable in the UK on the arising basis, and you cannot avoid UK tax by leaving the funds offshore. Existing non-domiciled individuals who have used the remittance basis may elect under the Temporary Repatriation Facility (TRF) to pay a reduced tax rate on pre-6 April 2025 foreign income and gains remitted during a three-year window. The TRF applies at 12 per cent for the years 2025–26 and 2026–27, rising to 15 per cent in 2027–28.
If my total income, including foreign income, falls below my Personal Allowance, do I need to file tax return?
It is a common misconception that a tax return should not be filed if no tax is due. Unfortunately, this is not the case. Payment of tax is unrelated to the filing of tax returns. Filling Tax returns is a legal obligation regardless of tax due. There are circumstances in which taxpayers are exempt from filing tax returns, as detailed in HMRC guidance.
For example, if foreign income exceeds £300.00, the taxpayer must file a tax return, regardless of total taxable income above or below the Personal Allowance. Remember that there may not be a penalty for non-payment of tax, but you can incur a penalty for not filing the tax returns.
What if I have failed to disclose my foreign income to HMRC and how can I rectify the situation?
If you have made an error or failed to declare foreign income, you should voluntarily disclose this to HMRC as soon as possible. We always advise clients to make a disclosure before they receive a nudge letter. Penalties for a prompted and unprompted disclosure are different. HMRC will also consider various factors, such as the nature of the error, whether it was deliberate or an error, and your level of cooperation.
If you have undisclosed foreign income, begin by gathering all relevant papers and information related to that income. This includes bank statements, investment reports, and other relevant financial records. Then, determine the amount of tax due on the undeclared income, taking into account any applicable double tax agreements. Once your disclosure has been submitted, you need to wait for HMRC to send you a payment reference. HMRC may request additional information and ask for the calculations. Therefore, it would be best if you had your paperwork ready.
How does the £2,000 foreign income tax-free allowance apply, and what are the associated rules?
Only non-domiciled individuals can use the remittance basis to exclude unremitted foreign income up to £2,000 without filing a tax return. In other words, if a non-domiciled person’s total foreign income and gains that remain offshore do not exceed £2,000 in a tax year, they do not have to declare those under Self Assessment. Once unremitted foreign income or gains exceed £2,000, or if the individual opt to be taxed on the arising basis, they must file a tax return, and either report their worldwide income or claim the remittance basis formally on their return.
UK-domiciled residents no longer have a £2,000 threshold but instead may qualify for the “trivial foreign income” exemption. Under this rule, a UK resident and domiciled individual need not report foreign income if it is less than £300 in total for the tax year and foreign capital gains are under £3,000. If both foreign income and gains stay below those limits, no disclosure is required. However, if foreign income exceeds £300 or gains exceed £3,000, the UK-domiciled individual must include all overseas income and gains on a Self Assessment return, regardless of whether the money has been brought into the UK.
How do I report overseas rental income on my Self Assessment tax return?
When you rent out a property abroad, you must include that income under “Foreign Property” on your Self Assessment tax return. Convert each month’s rent from foreign currency into GBP using HMRC’s exchange rates for the relevant tax year. Deduct allowable expenses—property management fees, insurance, maintenance, and mortgage interest (if applicable).
Any foreign withholding tax paid can be claimed as a credit. File Form SA106 (Foreign pages) along with your main SA100. If you’re unsure about exchange rates, allowable deductions, or treaty relief, call our specialist tax accountant to avoid penalties and maximise relief.
What is the difference between the remittance basis and the new FIG regime?
Prior to April 2025, non-domiciled individuals could use the remittance basis: pay UK tax only on foreign income and gains when “brought” into the UK. This required a Remittance Basis Claim and often a Remittance Basis Charge for long-term UK residents. From April 6 2025, UK tax law replaces the remittance basis with the Foreign Income & Gains (FIG) regime. Under FIG, domicile no longer matters. “New residents” (not UK tax-resident for 10 years) can exempt foreign income and gains for their first four tax years—whether remitted or not. Once the four-year window ends, all future worldwide income is taxed on the arising basis.
When Should I Engage a Specialist Foreign Income Tax Advisor?
You should consult an expert as soon as you have any overseas earnings or gains or if you think you owe UK tax on foreign funds. Common triggers include purchasing property abroad, receiving dividends from a non-UK company, inheriting assets overseas, or planning to return to the UK after living abroad. A specialist can clarify residence status, domicile rules, and double tax treaty entitlements. Early advice helps you avoid costly mistakes—such as missing a Self-Assessment filing deadline, underreporting foreign income, or overpaying due to a misunderstanding of the remittance basis and Foreign Income and Gains (FIG) regime rules. Contact us today to schedule a complimentary 30-minute consultation.