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How to Pay Tax on Foreign Income HMRC

As a rule, a UK resident with foreign income or capital gains will need to fill in a Self Assessment tax return. But, some foreign income gets taxed differently.

PAYING TAX ON FOREIGN INCOME: Some situations do not require filling in a tax return.

For example, if the only foreign income is dividends less than £300 in total. That is providing there is nothing else to report to HMRC.

Note: The rules for paying tax on foreign income differ if your ‘domicile’ (permanent home) is abroad.

Registering for Self Assessment

What if you do not usually send in a tax return. In this case you would need to register for Self Assessment before the 5th of October following the tax year that you got the income.

Note: Once you have registered you will receive a letter informing you of the next step.

Filling in Tax Returns
  1. Record overseas income or gains in the section marked ‘foreign‘ of the tax return.
  2. Be sure to include income taxed abroad already to get the Foreign Tax Credit Relief (if it applies).
  3. HMRC has guidance in the ‘Foreign notes‘ section on how to report foreign income or gains in a tax return.
Foreign Income Taxed ‘Differently’

As a rule, foreign income gets taxed in the same way as United Kingdom income. But, some special rules apply for:

  • Pensions
  • Rental income from property
  • Certain types of income gained from employment

Tax is due on pensions if you are resident or you were resident in any of the five (5) previous tax years. You will also pay tax on any foreign pension payments. That includes any ‘unauthorised payments‘ such as some lump sums and early payments. Your pension provider will confirm how the payments get taxed.

Rent from Property

In most cases, you will pay tax in the standard way on income from overseas property. But, different rules apply when renting out more than one property. In this case, you might be able to offset losses against other overseas properties.

Special Employment Income

Generally, working abroad and in the UK means you pay taxes in the usual way. But, some special taxation rules apply, for example:


Tax on Foreign Income: Information explaining the rules of UK taxation on money earned abroad.
Residence Status and Tax: How your status as a resident affects your liabilities for UK taxation.
Non-domiciled Resident: Check the tax rules for a UK resident with a ‘domicile’ outside the UK.
Taxed Twice: How the double-taxation agreement affects the tax you pay in the UK and abroad.
Foreign Students: The rules for paying tax on foreign income while studying in the United Kingdom.

How to Pay Tax on Foreign Income HMRC in the United Kingdom