Creative Takeaways
- UK residents must report all foreign income and gains, including wages, rent, pensions, and investments abroad.
- Tax residence status determines what’s taxable: UK residents pay on worldwide income, while non-residents usually pay only on UK income.
- Double taxation relief prevents paying tax twice by letting you claim credit for foreign tax already paid.
- Report foreign income through a Self Assessment tax return, registering by 5 October and filing by 31 January each year.
- The remittance basis lets some non-domiciled individuals pay tax only when income is brought into the UK.
Here’s how UK tax on foreign income actually works, what counts, and how to make sure you’re not paying more than you should:
Table of contents
- 1. When you need to pay UK tax on foreign income and gains
- 2. How your UK tax residence affects what income is taxed…
- 3. How double taxation relief and foreign tax credits work
- 4. How to report foreign income and gains to HMRC
- 5. The arising basis and the new Foreign Income and Gains (FIG) regime
- 6. Get expert advice before you file your tax return
1. When you need to pay UK tax on foreign income and gains
If you’re a UK resident, HMRC expects you to report any money you earn outside the UK. Even if you’ve already paid tax on it abroad!
That meansforeign income includes things like:
- wages or freelance payments for work done overseas
- dividends or interest from savings and investments abroad
- rent from property outside the UK
- pensions held overseas
- and even income from the Channel Islands or Isle of Man!
HMRC classes all of that asforeign income and gains. The key question is: are you a tax resident in the UK?
If you are, you’ll normally pay UK tax on your worldwide income and gains.
Your tax residence is worked out using the Statutory Residence Test, which looks at how many days you spend in the UK, whether you’ve got a home here, and where you work.
If that sounds dry, here’s the short version:
If you live in the UK for most of the year, HMRC probably sees you as a UK resident, and you’ll need to declare your foreign income on your Self Assessment tax return.
2. How your UK tax residence affects what income is taxed…
Whether or not you pay UK tax on your foreign income depends on one thing: your tax residence status.
As a UK resident
If you’re classed as a UK resident, you’ll usually pay UK tax on all your worldwide income and gains. This includes anything earned abroad, even if the money never comes into the UK.
As a non-resident
If you’re non-resident, you’ll normally only pay tax on UK income. For example: if you rent out a flat here or earn money from UK clients.
If you have a split-year treatment
There’s also something called split-year treatment.
This can apply if you move in or out of the UK partway through the tax year. It basically means HMRC divides your year into a UK-resident part vs. a non-resident part, so you only pay UK tax for the period you were here.
It’s worth noting that “residence” for tax purposes isn’t always the same as where you physically live! You might spend months abroad but still count as UK resident depending on your ties, like having a home or family here.
| Creative Tip If you’re unsure, HMRC’s UK residence and tax tool is a good starting point. It’ll help you check your status before you file your return. |
3. How double taxation relief and foreign tax credits work
One of the most common worries about foreign income is getting taxed twice. You’re once abroad and then again in the UK…
Luckily, HMRC has a system to stop that from happening.
It’s called Foreign Tax Credit Relief.
If you’ve already paid tax on your foreign income or gains in another country, you can usually claim a credit for that amount against your UK tax bill. In other words: you won’t pay tax twice on the same money. You’ll just top up to the UK rate if it’s higher.
The exact amount of relief you can claim depends on:
- how much foreign tax you’ve already paid
- what type of income it is (employment, rent, dividends, etc.)
- whether the UK has a double taxation agreement (DTA) with that country
Most major countries have a DTA with the UK, which sets clear rules about where and how your income should be taxed. If you’re working remotely for an overseas client or earning investment income abroad, that agreement often decides which country gets first claim on your tax.
| Creative Tip You can find the details on GOV.UK under “If you’re taxed twice”. |
4. How to report foreign income and gains to HMRC
Once you know your income is taxable in the UK, the next step is to tell HMRC about it. You’ll do that through a Self Assessment tax return, using the Foreign section to report your overseas income and gains.
Here’s what the process looks like:
- Register for Self Assessment by 5 October after the end of the tax year (that’s 5 April each year).
- File your tax return online by 31 January the following year.
- If you’ve filed before, use your existing Unique Taxpayer Reference (UTR).
Even if you’ve already paid tax abroad, HMRC still wants to see the details! You’ll need to include the foreign tax paid so that you can claim Foreign Tax Credit Relief if it applies.
If you’ve realised you missed reporting income from earlier years, don’t panic!
You can fix it using the Worldwide Disclosure Facility, HMRC’s official system for correcting undisclosed foreign income. It’s easy to use, and definitely better than waiting for HMRC to contact you first.
Once it’s submitted, you’ll get confirmation from HMRC, and they’ll calculate if you need to pay UK tax or if you’ve already covered it through foreign tax paid.
5. The arising basis and the new Foreign Income and Gains (FIG) regime
This is where UK tax on foreign income gets a bit technical…
But don’t worry, WallsMan Creative is here to help you, and it’s actually easier than it sounds. HMRC looks at how and when your foreign income or gains are taxed in the UK.
From 6 April 2025, the remittance basis was replaced by the Foreign Income and Gains (FIG) regime for eligible individuals.
Here’s what that means:
- Arising basis: This is the default for most UK residents. It means you pay UK tax on your worldwide income and gains as soon as they arise. Even if you leave the money sitting in a foreign account.
- Foreign Income and Gains (FIG) regime: This applies to new UK residents who have been non-resident for at least 10 consecutive tax years before returning. Under this new regime, you don’t pay UK tax on most foreign income and gains for your first four tax years of residence.
After those four years, you move onto the arising basis, and your worldwide income becomes taxable in the UK.
| Creative Example Say you’re a designer moving to the UK after working abroad for over a decade. For your first four tax years, your foreign earnings and gains are generally exempt under the FIG regime. Once that period ends, HMRC will tax your worldwide income on the arising basis. |
If you’re unsure whether you qualify for the FIG regime or how it affects your situation, a tax specialist can help you work it out before you file… and that’s where we come in!
6. Get expert advice before you file your tax return
WallsMan Creative works with creative people to help you understand how foreign income and gains affect creative professionals, freelancers, and small business owners in the UK.
If you earn abroad but call the UK home, we’ll connect you with the right experts so your finances stay compliant, and you don’t have to be afraid of HMRC anymore.
A good accountant can help you figure out what’s actually taxable in the UK, what qualifies for relief, and how to avoid paying more than you should. It’s the kind of advice that saves you time, stress, and sometimes a fair bit of money.
