UK Taxation on Foreign Income

Expert Guidance on UK Tax for Residents

As a UK resident, you’re taxed on your worldwide income, including earnings from abroad.

At HHM Chartered Accountants and Tax Advisors, we specialise in helping UK residents navigate complex foreign income tax obligations. From reporting global income to claiming double taxation relief, we ensure you’re compliant and minimise your tax burden.

Stay compliant and maximise your tax savings with personalised support from our foreign income tax experts. 

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Foreign Income Taxation for UK Residents

As a UK resident, you are required to pay tax on your worldwide income. Whether you’re working overseas, receiving foreign dividends, or earning rental income from property abroad, it’s essential to understand how these earnings are taxed in the UK.

Are you a UK Resident?

You’re a UK resident if:

    ▫️You meet the automatic UK tests or sufficient ties test.
    ▫️You don’t meet the automatic overseas tests.

If neither applies, you're considered non-resident for tax purposes. This can include:

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What is Foreign Income?

Foreign income refers to any earnings or financial gains you make outside the UK. This can include:

    ▫️Salaries or wages from overseas employment.
    ▫️Dividends from foreign investments.
    ▫️Rental income from properties abroad.
    ▫️Pensions or other foreign-source income.

As a UK resident, this income is taxable under UK law, and you must report it to HMRC.

Worldwide Income Taxation

As a UK resident, you are taxed on your global income, meaning all income from both UK and foreign sources must be declared:

    ▫️Income Tax is applied based on total earnings (including foreign income).
    ▫️Personal Allowance may apply, reducing taxable income.
    ▫️Foreign income is converted to GBP(£)

Note: The UK taxes residents on their entire income, not just what they earn within the country.

Double Taxation Relief

Double taxation relief may be available when both the UK and the country where you earned income tax the same earnings. To avoid being taxed twice on the same income, the UK has Double Taxation Agreements (DTAs) with many countries, which allow you to:

    ▫️Claim tax credits for foreign taxes paid, reducing your UK tax bill.
    ▫️Exempt certain foreign income from UK tax, based on the agreement.

This relief ensures you’re not taxed twice on the same income.

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Reporting Foreign Income

You must report your foreign income to HMRC, typically via a self-assessment tax return. Here’s how:

    ▫️Complete your self-assessment: Include your foreign income under the "foreign income" section.
    ▫️Convert foreign income to GBP (£) using HMRC’s exchange rates.
    ▫️Provide details of taxes already paid in the foreign country to claim relief if applicable.

Ensure all foreign income is declared accurately to avoid penalties.

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Our Foreign Income Tax experts are ready to give you the needed support. Get in touch with us today for a free consultation.

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Your Personal and Business Tax Advisors for Foreign Income Tax Assessment

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With extensive experience in Accountancy, UK Tax services and Business Advisory, our team is well-versed in all aspects of compliance and tax-saving opportunities. We keep up with the latest tax regulations, ensuring you always receive accurate, strategic advice tailored to your specific circumstances.

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We know every client’s needs are different. By getting to know you and your financial goals, we provide advice that’s as unique as you are. From tailored tax planning to ongoing support, we’re dedicated to helping you make confident, informed decisions.

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Frequently Asked Questions (FAQs)

Double taxation relief allows UK residents to avoid being taxed twice on the same income, typically through Double Taxation Agreements (DTAs) with other countries.

Yes, if you’re a UK resident, you are required to declare foreign income to HMRC. This includes any income earned outside the UK, such as salary, rental income, dividends, or interest from foreign sources.

If you are a UK resident but non-domiciled, you do not pay UK tax on your foreign income or gains if they’re less than £2,000 in the tax year and you don’t bring them to the UK.

Money received as cash gift from abroad are not subject to UK income tax unless the cash gift generates interests or dividends.

UK residents are taxed on their income worldwide. The foreign income is generally subject to the same tax rules as income from within the UK. Meaning UK residents must report their global income on a Self Assessment tax return.

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