Do You Need to Pay UK Tax on Foreign Income?

If you earn income from overseas – whether it’s wages, rental property, investments, or pensions – you may need to pay UK tax on it. But this depends on your UK residence and domicile status, and recent changes coming into effect from 6 April 2025 could significantly impact your obligations.

What Counts as Foreign Income?

Foreign income is anything earned outside England, Scotland, Wales, and Northern Ireland. This includes the Channel Islands and Isle of Man also known as Offshore Income.

UK Resident or Not?

Non-residents only pay UK tax on their UK income.

UK residents normally pay UK tax on all income worldwide, unless they qualify for special reliefs.

Use HMRC’s statutory residence test to confirm your status.

Major Changes from 6 April 2025

Previously, UK residents with a foreign domicile could claim the remittance basis, meaning they only paid UK tax on foreign income brought into the UK. From April 2025, these rules are tightening significantly:

Remittance basis reliefs are largely scrapped.

More residents will be taxed on worldwide income regardless of domicile.

Income Thresholds to Know

If foreign income is under £2,000 and stays outside the UK → No need to report (for tax years before 2025).

If it’s £2,000+ or brought into the UK → You must report it in a Self Assessment tax return.

Working Abroad or Split Roles?

There are special rules for people working part-time in the UK and overseas. If you’re seconded to the UK, you may still benefit from Overseas Workday Relief – but this has changed from April 2025.

Claiming Tax Relief

If your income is taxed in both the UK and abroad, you may be able to claim Foreign Tax Credit Relief or use a Double Taxation Agreement. You’ll often need a certificate of residence from HMRC to prove eligibility.

Capital Gains from Abroad

Generally, CGT is paid in the country where you’re resident. But non-residents must still pay UK CGT on UK residential property sales.

What You Should Do

Contact us @ 0161 531 4179

If you’re unsure how the new 2025 rules affect you, or you work across borders, we can guide you through your Self Assessment, double taxation relief, and foreign income reporting. You can contact us if you have received HMRC Letters or if you have offshore income or Undisclosed Foreign Income.

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