Tax on Foreign Income

If you earn income from outside the UK, you may need to pay UK tax on it and report it through Self Assessment. Whether you pay UK tax depends primarily on your UK residence status, and if you've already paid tax abroad, Double Taxation Relief can prevent you from being taxed...

Tax on Foreign Income

What counts as foreign income

Foreign income is any income from outside England, Scotland, Wales and Northern Ireland. The Channel Islands and the Isle of Man are also classed as foreign.

Foreign income includes:

Wages from working abroad
Foreign investment income (dividends and savings interest)
Rental income from overseas property
Income from pensions held overseas

When you need to pay UK tax on foreign income

Whether you pay UK tax on foreign income depends on your UK residence status.

If you're not UK resident, you will not pay UK tax on your foreign income.

If you are UK resident, you'll normally pay tax on your foreign income. However, you may not have to if you're eligible for Foreign Income and Gains relief.

Before 6 April 2025, some UK residents with their permanent home ('domicile') abroad did not have to pay UK tax on foreign income under certain conditions.

Working out your UK residence status

Your residence status depends mainly on how many days you spend in the UK during the tax year (6 April to 5 April).

You'll be UK resident if you meet one or more of the automatic UK tests or the sufficient ties test, and you don't meet any of the automatic overseas tests.

Automatic UK tests

You're usually UK resident if:

You spent 183 or more days in the UK in the tax year
Your only home was in the UK for 91 days or more in a row, and you visited or stayed in it for at least 30 days of the tax year
You worked full-time in the UK for any period of 365 days and at least one day of that period was in the tax year you're checking

You may also be resident under the sufficient ties test if you spent a number of days in the UK and have additional ties here, like work or family.

Automatic overseas tests

You're usually non-resident if either:

You spent fewer than 16 days in the UK (or 46 days if you have not been a UK resident for the 3 previous tax years)
You worked abroad full-time (averaging at least 35 hours a week), and spent fewer than 91 days in the UK, of which no more than 30 were spent working

HMRC provides an online residence status checker that can help you determine your status for any tax year from 6 April 2016 onwards.

Split-year treatment when you move

When you move into or out of the UK, the tax year can be split into two parts: a non-resident part and a resident part. This means you only pay UK tax on foreign income for the time you were living in the UK.

This is called split-year treatment.

You will not get split-year treatment if you live abroad for less than a full tax year before returning to the UK. Other conditions also apply.

Reporting foreign income to HMRC

If you need to pay tax on foreign income, you usually report it in a Self Assessment tax return.

Before completing your tax return, you should:

Confirm whether you need to pay UK Income Tax on your foreign income based on your residence status
Check if you need to report the foreign income in a tax return

Some types of foreign income are taxed differently and may need to be reported in specific ways.

Double Taxation Relief

If you've paid tax on your foreign income in another country and you also need to pay UK tax on the same income, you may be able to claim tax relief to avoid being taxed twice. This is called Double Taxation Relief.

To claim this relief, you'll need to keep records of:

The foreign tax you've paid
Evidence of your foreign income
Details of any double taxation agreement (DTA) between the UK and the other country

If you haven't yet paid tax on the foreign income, you may need to apply for a certificate of residence to prove you're eligible for relief.

Relief for foreign tax paid is claimed through your Self Assessment tax return using the relevant helpsheet.

Non-domiciled residents (for tax years before 2025/26)

Before 6 April 2025, UK residents who had their permanent home ('domicile') outside the UK did not have to pay UK tax on foreign income if both of the following applied:

The foreign income or gains were less than £2,000 in the tax year
They did not bring the income into the UK (for example, by transferring it to a UK bank account)

If foreign income was £2,000 or more, it had to be reported.

From 6 April 2025 onwards, eligible individuals may claim Foreign Income and Gains relief instead.

When your situation changes

Your residence status can change from one tax year to the next. You should check your status if your situation changes, for example if you:

Spend more or less time in the UK
Buy or sell a home in the UK
Change your job
Have family move in or out of the UK, or get married, separate or have children

HMRC helpsheets for foreign income

HMRC provides detailed helpsheets to help you complete the foreign income sections of your Self Assessment tax return, including:

HS263: Relief for foreign tax paid (calculating foreign tax credit relief)
HS264: Paying tax on the remittance basis
HS302: Dual residents
HS262: Income and benefits from transfers of assets abroad and from non-resident trusts
HS265: Offshore funds
HS321: Gains on foreign life insurance policies

These helpsheets explain how to check if you qualify for certain reliefs and how to work out figures you need to include in your return.

Sources

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.

Tax on Foreign Income