UK Tax on Overseas Income: What Residents Report

If you're UK resident, you pay UK tax on overseas income and gains as well as on your UK income. That covers foreign wages, rent, interest, dividends, pensions and gains on foreign assets, whether or not you bring the money to the UK and whether or not another country has already taxed it.

Since 6 April 2025 this applies to almost everyone who lives here, because the old non-dom rules have gone. The main exceptions are new arrivals who claim the four-year FIG regime, and foreign income a tax treaty takes out of UK tax.

This guide covers what counts as foreign income, what you must report, how to declare it on the SA106 foreign pages, how Foreign Tax Credit Relief stops you paying twice, and what HMRC already knows.

If you'd like this checked for your own situation, see our UK tax returns for expats.

Do I pay UK tax on foreign income?

Does the UK tax what you earn abroad? If you're UK resident, normally yes. Residents are taxed on their worldwide income and gains in the tax year they arise. Non-residents pay UK tax only on their UK income.

So the first question is always residence, which is decided by the Statutory Residence Test. Nationality doesn't decide it and, since 6 April 2025, neither does domicile. The Channel Islands and the Isle of Man count as foreign.

👉 GOV.UK: Tax on foreign income

Image 1 — Is my foreign income taxable in the UK?

What counts as foreign income?

Which overseas income is caught? All the usual types:

• Overseas employment: pay for work done abroad or from a foreign employer.

• Overseas rental income: rent from a home, flat or holiday let outside the UK.

• Foreign interest and dividends: from overseas bank accounts, shares and funds.

• Foreign pensions: since 6 April 2017 the full amount of most foreign pensions is taxable. The old 10% deduction survives only for narrow categories, mainly certain Commonwealth government pensions paid in the UK. See how pension income is taxed.

• Overseas business income: profits of a trade or partnership carried on abroad.

• Foreign trusts: income and benefits from non-resident trusts, which have their own rules.

• Gains on foreign assets: such as selling overseas property or shares.

Crypto is different. HMRC's view is that exchange tokens such as bitcoin are located where their beneficial owner is resident, so a UK resident's crypto isn't a foreign asset just because it sits on an overseas exchange. The gains are still taxable.

👉 HMRC manual: foreign pensions (EIM75500)

When is foreign income not taxed in the UK?

Are there exceptions for UK residents? Yes, three main ones, plus a leftover from the old non-dom rules. Most have to be claimed on a tax return.

• The FIG regime. If you've become UK resident after at least 10 consecutive tax years of non-residence, you can claim relief on foreign income and gains for your first four years. It isn't automatic: you claim it, report the amounts and lose your personal allowance for that year. See our guide to the FIG regime.

• The overseas part of a split year. In the year you arrive or leave, the overseas part is taxed for most purposes as if you were non-resident. See split-year treatment.

• Treaty exemptions. Some treaties give only one country the right to tax certain income. If you're resident in two countries, the treaty tie-breaker can also limit what the UK taxes. See dual tax residency.

• Old remittance basis income. Foreign income from before 6 April 2025 that was sheltered by the remittance basis is still taxed if you bring it to the UK now. See our guide to the remittance basis.

Do I have to declare foreign income to HMRC if I've paid tax abroad?

Does foreign tax settle it? No. Tax paid abroad doesn't remove the UK charge or the duty to report. You report the gross income, then claim relief for the foreign tax.

Is there a minimum? There's no special allowance for foreign income, but the ordinary ones apply:

• Dividend allowance: the first £500 of dividends, UK and foreign together, is tax-free.

• Savings allowance: £1,000 of interest for basic-rate taxpayers and £500 for higher-rate taxpayers.

• Property allowance: total property income of up to £1,000, UK and overseas combined, is exempt and doesn't need reporting.

HMRC says you don't need a return if your only foreign income is dividends, your total dividends, UK and foreign, are less than the £500 allowance and you have no other income to report. Otherwise, a UK resident with foreign income or gains usually needs one. See do I need to file a UK tax return?

How to declare foreign income to HMRC

Where does it go? On a Self Assessment return. If you don't already file, register by 5 October after the end of the tax year. For 2025/26 that date was 5 October 2026, so if you've missed it, register now.

Most foreign income goes on the SA106 foreign pages, where you also claim relief for foreign tax. Some items belong elsewhere.

Where foreign income goes on the tax return

The 2025/26 return has a shortcut. If your only foreign income is untaxed interest of up to £2,000 and dividends of up to £500, it can go in boxes 3 and 6 of the main return without the SA106. The dividends go in net of foreign tax, so you can't claim Foreign Tax Credit Relief that way.

Three practical points:

• Convert to sterling. HMRC's notes ask for the exchange rate at the time the income arose and, if you're not sure, point you to HMRC's published rates. They don't say when an average rate is acceptable, so use one method consistently and keep your workings.

• Use the UK tax year. You report what arose between 6 April and 5 April. If the other country taxes by calendar year, its figures will straddle two UK returns, so match the foreign tax to the income it was charged on.

• Keep the evidence. Foreign tax returns, withholding certificates, bank and broker statements, and your exchange rate workings.

👉 HMRC form: SA106 Foreign pages and notes

👉 GOV.UK: HMRC currency exchange average rates

Foreign Tax Credit Relief: how double tax relief works

How do you avoid paying twice? In one of two ways. Where a treaty gives the UK the sole right to tax the income, you claim exemption in the other country. Where both countries can tax it, you claim Foreign Tax Credit Relief (FTCR) on your UK return. Our guide to UK double tax treaties explains which applies to each type of income.

FTCR sets the foreign tax against the UK tax on the same income, within limits:

• The cap. The credit is the lower of the foreign tax paid and the UK tax on that income. It can't reduce tax on other income.

• The treaty rate. If a treaty limits the foreign tax to, say, 15% and more was withheld, the credit stops at 15%. You reclaim the rest from the other country.

• The minimum foreign tax. You can only claim the minimum due under the other country's law, after the reliefs and allowances available to you there.

• The time limit. Four years from the end of the tax year or, if later, 31 January after the tax year in which the foreign tax is paid.

You can deduct the foreign tax from the income instead, but HMRC says that's only better where there's no UK tax to pay that year.

Image 2 — Foreign Tax Credit Relief worked examples

Worked example: Spanish rental income

• Maria is UK resident with a £60,000 salary. In 2026/27 her flat in Valencia makes a rental profit of £10,000.

• She pays Spanish tax of £2,400. UK tax at 40% is £4,000.

• FTCR is the lower figure, £2,400, so she pays HMRC £1,600.

• Had the Spanish tax been £4,500, the credit would stop at £4,000. The extra £500 isn't refunded.

Worked example: US dividends with 15% withheld

• Priya is UK resident with a £70,000 salary. In 2026/27 she receives US dividends of £10,500, with 15% US tax withheld: £1,575.

• The first £500 falls within the dividend allowance. The other £10,000 is taxed at 35.75%, the higher rate for dividends from April 2026: £3,575.

• FTCR is £1,575, so she pays HMRC £2,000.

👉 HMRC helpsheet: HS263 Relief for foreign tax paid

👉 HMRC manual: time limits for claiming relief (INTM162560)

UK tax on overseas rental income

Is foreign rent taxed like UK rent? Mostly. The profit is worked out under UK rules, but your overseas lettings form a separate business from any UK ones.

• Losses are ring-fenced. A loss on an overseas property can be set against other overseas properties or carried forward, but not against UK rental profits.

• Mortgage interest is restricted. On residential lets, finance costs aren't deducted from the rent. You get a basic-rate tax reduction instead.

• The £1,000 property allowance applies. You claim it in place of expenses, not on top.

• No Rent a Room relief. It only applies to a home in the UK.

• Rates rise in 2027. The Finance Act 2026 sets property rates of 22%, 42% and 47% for 2027/28 in England, Wales and Northern Ireland. They cover overseas as well as UK rental profits.

👉 HMRC manual: rent from property outside the UK (PIM4702)

What does HMRC already know about overseas income?

Can HMRC see foreign accounts? Often. Under the Common Reporting Standard, financial institutions in over 100 jurisdictions report accounts held by people resident elsewhere, and tax authorities exchange that data automatically. HMRC can compare it with tax returns, and its disclosure guidance refers to letters it sends about money or assets abroad.

The rules for offshore errors are tougher than for UK ones:

• Higher penalties. The maximum is 100%, 150% or 200% of the tax, depending on how readily the territory involved shares tax information with the UK.

• A longer window. For 2015/16 onwards, HMRC can assess Income Tax and Capital Gains Tax on offshore matters for up to 12 years, even where you took reasonable care, and 20 years for deliberate errors. The 12 years don't apply if HMRC received the overseas information in time to act within the normal limits.

If you have undeclared foreign income from earlier years, disclosing it before HMRC contacts you can reduce the penalty. See our guide to the Worldwide Disclosure Facility.

👉 HMRC manual: Common Reporting Standard (IEIM400080)

👉 GOV.UK: penalties for offshore non-compliance (CC/FS17)

👉 HMRC manual: 12-year time limit for offshore matters (CH53510)

Deadlines and payments on account

When is it all due? Foreign income follows the normal Self Assessment timetable. It usually arrives with no UK tax deducted, so it can bring you into payments on account: two advance payments towards your next bill, each half of the tax you owed for the last year, due on 31 January and 31 July. They don't apply if your last bill was under £1,000, or if more than 80% of your tax was collected at source.

Key dates for foreign income

👉 GOV.UK: Self Assessment deadlines

Common mistakes with UK tax on overseas income

• Assuming tax paid abroad ends the matter. The income is still reportable here, and UK tax is often higher.

• Relying on the old non-dom rules. The remittance basis and the £2,000 exemption for unremitted foreign income ended on 6 April 2025.

• Claiming credit for all the foreign tax withheld. The credit is limited to the treaty rate and to the UK tax on that income.

• Forgetting small accounts. An old overseas savings account can still be reported to HMRC under the Common Reporting Standard.

Frequently asked questions

Do I pay UK tax on foreign income?

Yes, if you're UK resident. Since 6 April 2025, residents are taxed on worldwide income and gains as they arise, wherever the money is kept. The main exceptions are a FIG regime claim, the overseas part of a split year, and income exempted by a tax treaty.

Do I need to declare foreign income if I've already paid tax on it abroad?

Yes. You report the full income on your Self Assessment return and then claim Foreign Tax Credit Relief for the foreign tax. Tax paid abroad doesn't remove the duty to report.

What is the SA106 form?

SA106 is the foreign pages of the Self Assessment return. You use it to report overseas interest, dividends, pensions and rental income, and to claim Foreign Tax Credit Relief. Foreign employment income and gains go on the employment and capital gains pages.

How much foreign income is tax-free in the UK?

There's no separate allowance for foreign income. Your personal allowance, the £500 dividend allowance, the savings allowance and the £1,000 property allowance cover UK and foreign income together.

How does Foreign Tax Credit Relief work?

It gives a credit against your UK tax for foreign tax paid on the same income or gain. The credit is the lower of the foreign tax and the UK tax on that income, and can't exceed the treaty rate. You claim it on the SA106 pages, normally within four years of the end of the tax year.