Tax on Foreign Income for UK Residents: What to Declare in 2026/27

If you are UK resident for tax purposes, you are normally taxable on your worldwide income and gains — foreign rent, overseas dividends, interest in an offshore account, a pension paid from abroad — whether or not you bring the money to the UK. The main exception is the Foreign Income and Gains (FIG) regime, which gives qualifying new arrivals up to four tax years of relief, and it replaced the old non-domicile remittance basis from 6 April 2025.

Where the same income has already been taxed abroad, double tax relief usually stops you paying twice. But you still have to report it, and foreign income is one of the most common reasons an otherwise simple tax affair needs a Self Assessment return.

Key points

• UK residents are taxed on worldwide income; remitting the money to the UK is no longer the trigger.
• The remittance basis and domicile-based rules were abolished from 6 April 2025 and replaced by the residence-based FIG regime.
• FIG gives relief on foreign income and gains for your first four years of UK residence, but only if you were non-UK resident for the 10 tax years before you arrived.
• Claiming FIG costs you the £12,570 Personal Allowance and the £3,000 Capital Gains Tax annual exempt amount for that year.
• Foreign tax credit relief is capped at the UK tax due on the same income — it never generates a refund of the overseas tax.

Worldwide income: what UK residence actually means for your tax

Residence is decided by the Statutory Residence Test, not by where you hold a passport or keep your main home. It looks at days spent in the UK, work patterns and connections such as family, accommodation and previous residence. If the test makes you UK resident for 2026/27, the default position is that every source of income counts — including income you never move out of its home country.

If you arrive in or leave the UK part-way through a tax year, split-year treatment may apply, so only the UK part of the year is assessed on worldwide income. Split-year treatment is not automatic in the sense of being optional — it applies if you meet one of the statutory cases — and it interacts with the FIG regime, so the arrival year needs care.

How each type of foreign income is taxed

Scotland: Scottish income tax rates apply to non-savings, non-dividend income only. So foreign employment income, overseas rental profits and foreign pensions are taxed using the Scottish bands — starter 19%, basic 20%, intermediate 21%, higher 42%, advanced 45% and top 48% — while foreign dividends and offshore interest are taxed at the same UK-wide rates as everyone else.

The FIG regime: four years of relief for new arrivals

The four-year Foreign Income and Gains regime replaced the remittance basis for 2025/26 onwards. It is based purely on residence history, so domicile no longer decides how your overseas income is taxed. Under FIG, qualifying foreign income and foreign gains arising in the relief period are exempt from UK tax, and you can bring the money to the UK freely without a further charge.

Who qualifies

• You must be UK resident in the year you claim.
• You must have been non-UK resident for the 10 consecutive tax years immediately before your first year of UK residence.
• Relief runs for a maximum of four consecutive tax years from that first year of residence — the clock keeps ticking even in a year you do not claim, or a year you spend abroad.
• Someone who arrived shortly before 6 April 2025 can use FIG for whatever remains of their four-year window.

What claiming FIG costs you

FIG is a claim, not a default. You have to make it on your tax return and quantify and designate the specific income and gains you want exempted — HMRC does not accept a blanket statement. For any year you claim, you lose your £12,570 Personal Allowance and your £3,000 Capital Gains Tax annual exempt amount. That means the claim is only worth making if the foreign income you are sheltering is comfortably larger than the allowances you give up.

A rough test: giving up the Personal Allowance costs a higher-rate taxpayer £12,570 × 40% = £5,028 of extra tax. So designating £10,000 of foreign dividends that would otherwise be taxed at 35.75% (£3,575 saved, less the £500 allowance) leaves you worse off. Designating £80,000 of foreign income does not.

Overseas Workday Relief

Employees who qualify for FIG can also claim Overseas Workday Relief on earnings for duties performed outside the UK during the same four-year window. From 2025/26 the relief is capped at the lower of 30% of qualifying employment income or £300,000 a year, and it no longer depends on keeping the money offshore.

If you used the remittance basis before April 2025

Foreign income and gains that arose before 6 April 2025 and were kept offshore under the remittance basis remain taxable if you bring them to the UK later. The Temporary Repatriation Facility lets former remittance-basis users designate those older amounts and pay a flat charge instead, after which the money can be remitted tax-free. The facility runs for three tax years from 2025/26, with the charge understood to be 12% for 2025/26 and 2026/27 and 15% in the final year.

Inheritance Tax also moved to a residence test from 6 April 2025: long-term UK residents are within the scope of IHT on worldwide assets, broadly once UK resident for 10 of the previous 20 tax years. The nil-rate band is £325,000, the residence nil-rate band £175,000 and the rate 40%.

Double tax relief: not paying twice on the same income

Most foreign income has already had tax taken at source — withholding tax on dividends, local income tax on rent. There are three routes to relief:

1. Treaty relief. The UK's double taxation agreements either give one country the exclusive right to tax a source, or cap the rate the source country may charge. Where a treaty caps withholding tax at, say, 15% and 25% was deducted, the excess must be reclaimed from the foreign tax authority — the UK will only credit the treaty rate.
2. Foreign Tax Credit Relief. The foreign tax is credited against your UK liability on the same income, limited to the UK tax actually due on that slice. If the foreign tax is higher, the excess is lost.
3. Deducting the foreign tax. Instead of a credit, you can treat the overseas tax as an expense and be taxed on the net figure. This is usually worse, but can help if you have losses.

Worked example

Priya lives in Manchester. In 2026/27 she has a UK salary of £55,000, profit of £4,000 from a flat in Spain (£800 of Spanish tax paid) and £1,500 of dividends from a US company with £225 withheld at the 15% treaty rate.

• Non-savings income: £55,000 + £4,000 = £59,000. Less the £12,570 Personal Allowance = £46,430 taxable.
• £37,700 at 20% = £7,540. The remaining £8,730 at 40% = £3,492. Non-savings tax = £11,032.
• Dividends sit above the basic rate band. £500 is covered by the dividend allowance; £1,000 at 35.75% = £357.50.
• UK tax before relief = £11,389.50.
• The Spanish rental profit falls in the 40% band, so UK tax on it is £4,000 × 40% = £1,600. The £800 of Spanish tax is fully creditable.
• UK tax on the US dividends is £357.50, so the £225 withheld is fully creditable.
• Total credit £1,025. UK tax payable = £11,389.50 − £1,025 = £10,364.50, of which most will already have been collected through PAYE.

Had the Spanish tax been £2,000 rather than £800, the credit would still be capped at £1,600 — the £400 excess simply falls away.

Declaring foreign income on your tax return

Foreign income almost always means Self Assessment, because PAYE has no way of collecting tax on it. You need to register by 5 October following the end of the tax year in which the income arose, file online by 31 January (or on paper by 31 October) and pay by 31 January. If you are unsure whether the rest of your position already pushes you into the system, our guide on whether you need to file a tax return runs through the triggers.

Which pages to use

Overseas income goes on the SA106 foreign pages, which is also where you claim Foreign Tax Credit Relief, country by country. Foreign employment earnings go on the employment pages; overseas property profits go on SA106 rather than the UK property pages. Report amounts in sterling, converted using an acceptable exchange rate — HMRC publishes monthly and annual average rates, and you should use one method consistently.

Small amounts of foreign dividends can sometimes be entered in the main return rather than on SA106, but the threshold has moved with the dividend allowance, so check the current SA106 notes before shortcutting.

Mistakes that cause trouble

• Assuming nothing is due because it was taxed abroad. The income is still reportable, and if the foreign rate is lower than yours the UK collects the difference.
• Thinking untouched money is untaxed. Since April 2025, leaving interest or rent in an overseas account makes no difference unless you qualify for and claim FIG.
• Forgetting the trading and property allowances. The £1,000 property allowance can cover a very small overseas letting; the £1,000 trading allowance can cover foreign freelance income.
• Ignoring information exchange. Under the Common Reporting Standard, HMRC receives account data from more than 100 jurisdictions, so undeclared offshore income is routinely picked up. Penalties for offshore non-compliance are higher than for domestic errors.

What to do next

Work out the UK tax on the whole picture before deciding anything about FIG or credits. Put your total income, including the foreign element converted to sterling, through the income tax calculator to see the marginal rate that will apply to the overseas slice. If the foreign income is rent, the rental income tax calculator shows how profits are taxed once finance costs are restricted, and the savings interest tax calculator handles offshore interest against your Personal Savings Allowance.