Foreign Income Tax UK: Reporting Worldwide Income

Introduction

UK residents are generally taxed on their worldwide income. If you have foreign income, you need to understand how to report it and what reliefs are available to avoid double taxation.

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Who Must Report Foreign Income?

UK Residents

If you're UK tax resident, you must report worldwide income including:

• Foreign employment income
• Overseas rental income
• Foreign dividends and interest
• Overseas business profits
• Foreign pensions

Non-Domiciled Residents

Special rules may apply if you're UK resident but not domiciled. See "Remittance Basis" below.

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Types of Foreign Income

Employment Income

• Salary from overseas employer
• Benefits from foreign employment
• Bonuses and commissions

Property Income

• Rental income from overseas property
• Proceeds from foreign property sales (CGT)

Investment Income

• Foreign dividends
• Overseas bank interest
• Investment gains

Business Income

• Profits from foreign business activities
• Freelance work for overseas clients

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Currency Conversion

HMRC Rules

• Convert foreign income to GBP
• Use the exchange rate on the date income was received
• Or use average annual rate (HMRC publishes these)

Record Keeping

Keep records of:

• Original currency amounts
• Exchange rates used
• GBP equivalents

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Double Taxation Relief

What It Is

Relief to avoid paying tax twice on the same income - once in the foreign country and again in the UK.

Types of Relief

Tax Treaties: UK has treaties with many countries specifying which country can tax what.

Foreign Tax Credit: Credit UK tax bill for foreign tax already paid.

Deduction Method: Deduct foreign tax paid as expense (less common).

Claiming Relief

Report on your Self Assessment return:

• Foreign income (gross)
• Foreign tax paid
• Claim double taxation relief

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Remittance Basis

What It Is

Optional basis for non-UK domiciled residents - only pay UK tax on foreign income brought to the UK.

Who Can Claim

• UK tax resident
• Not UK domiciled
• Have unremitted foreign income/gains

Remittance Basis Charge

If you've been UK resident for:

• 7 of last 9 years: £30,000 charge
• 12 of last 14 years: £60,000 charge
• 15 of last 20 years: Deemed domiciled (no remittance basis)

Considerations

Complex area - seek specialist advice if relevant.

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Reporting Requirements

Self Assessment

Foreign income is reported through Self Assessment using:

• SA106 (Foreign Income)
• Relevant supplementary pages

Deadlines

Same as UK income:

• Online filing: 31 January
• Payment: 31 January

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Common Mistakes

1. Not converting currency correctly - Use proper exchange rates
2. Missing foreign income - All worldwide income must be reported
3. Not claiming double taxation relief - Don't pay tax twice
4. Incorrect remittance basis claims - Complex rules, get advice

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FAQs

Do I need to report small amounts?

Yes, all foreign income should be reported regardless of amount.

What if I paid foreign tax?

Claim double taxation relief to reduce your UK tax bill.

Can I claim foreign expenses?

Generally yes, same rules as UK income apply.

What about crypto earned overseas?

Crypto follows CGT rules regardless of where earned or stored.

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Conclusion

UK residents must report worldwide income. The key is understanding what reliefs are available to avoid double taxation. Keep good records of foreign income, exchange rates, and any foreign tax paid. For complex situations, especially involving remittance basis or significant foreign holdings, professional advice is worthwhile.