Foreign Income & Double Taxation

UK Tax Residence

Whether you pay UK tax on foreign income depends on your tax residence status. The Statutory Residence Test (SRT) determines this based on:^[4]

Automatic overseas tests — you’re non-resident if you were resident in the UK in none of the previous 3 years and are present for fewer than 46 days
Automatic UK tests — you’re resident if you’re present in the UK for 183 or more days
Sufficient ties test — if neither automatic test applies, the number of ties to the UK (family, accommodation, work, 90-day presence, country) determines your status

What Counts as Foreign Income

Foreign income includes:^[1]

Wages or self-employment earnings from overseas work
Rental income from overseas property
Overseas pensions
Interest from foreign bank accounts
Dividends from foreign companies
Capital gains on overseas assets

The Remittance Basis

If you’re UK resident but not domiciled in the UK (a “non-dom”), you may be able to use the remittance basis. This means you only pay UK tax on foreign income that you bring (“remit”) to the UK.^[1]

There’s no charge for the first 7 years of UK residence. After that, an annual charge applies (£30,000 after 7 years, £60,000 after 12 years).

Note: The remittance basis regime is being reformed. Check the latest GOV.UK guidance for current rules, as significant changes have been announced.

Double Taxation Relief

If you pay tax on the same income in both the UK and another country, you shouldn’t have to pay twice. The UK has tax treaties (Double Taxation Agreements) with over 130 countries.^[3]

Relief typically works by giving you a tax credit in the UK for the foreign tax you’ve paid, so you only pay the difference (if any). You claim this through your Self Assessment return.

Reporting Foreign Income

Foreign income is reported on the SA106 supplementary pages of your Self Assessment return. You’ll need to declare:^[5]

The type and amount of foreign income
The country it came from
Any foreign tax paid
Whether you’re claiming the remittance basis

Converting Foreign Currency

You must convert foreign income to pounds sterling. Use either the exchange rate on the date you received the income, or an acceptable average rate for the tax year. HMRC publishes exchange rates on GOV.UK.^[1]

Frequently Asked Questions

Do I pay UK tax on foreign income?

If you are UK tax resident, you normally pay UK tax on your worldwide income, including overseas earnings, property rental, pensions, bank interest, dividends, and capital gains from foreign assets.

How do I avoid being taxed twice on foreign income?

The UK has Double Taxation Agreements with over 130 countries. You typically receive a tax credit in the UK for the foreign tax you have already paid, so you only pay the difference. Claim this through your Self Assessment return.

How do I report foreign income on my tax return?

Foreign income is reported on the SA106 supplementary pages of your Self Assessment return. You must declare the type and amount of income, the country it came from, any foreign tax paid, and convert amounts to pounds sterling.

Sources

Tax on foreign income — GOV.UK
Tax on your UK income if you live abroad — GOV.UK
Tax treaties — GOV.UK
Statutory Residence Test — GOV.UK
Self Assessment forms and helpsheets — GOV.UK

Foreign Income: UK Tax Rules & Double Taxation