I have received some income from another country, because it’s already been taxed there, do I still need to put it on my UK Tax Return?
The answer for most people will be ‘yes’.
There are a few peculiarities which means that some overseas income does not need to be included on a UK Tax Return. This is the case (presently) for non-domiciled individuals who have only been in the UK for a certain length of time, and who don’t bring their overseas income into the UK (although those rules are going to change from April 2025). Or, for overseas income which is exempt from UK taxation by virtue of the tax treaty between the UK and the other country also does not need to necessarily be included (although sometimes, depending on what the income is, additional forms need to be filled out and filed with the Tax Return).
Also, there are particular rules where you are either coming to the UK part way through a Tax year, or leaving the UK part way through a Tax year – in which case overseas income does not necessarily need to go onto the Tax Return (although certain residence declarations need to be made properly to make sure that the income is correctly excluded in a way in which HMRC will accept).
But as a general rule, if you are a UK resident for a Tax year, you are taxable on your worldwide income and gains. Even if that income has already been taxed in another country, so this means that you should include it on your UK Tax Return.
But it’s not as simple as that…as you would usually need to look to the double tax treaties and double tax relief (or exemptions where applicable) so you’re not unduly paying tax in two countries on your overseas income.
Generally, the Tax rules work out so that you aren’t required to pay more tax overall than you would have done if the income was taxed in the UK alone. But, if the ‘other’ country has a lower tax rate than that applicable in the UK, it can mean that there is a ‘top up’ of UK tax to pay, to arrive at the correct overall amount.
Even if there is no additional UK tax to be paid on the income, it should still normally be reported on the Tax Return (in part because it can affect different thresholds, or rates that other income is taxed at etc.).
If you have any questions or would like to discuss Tax planning, get in touch with our team of experts on 01424 730345 or email bexhill@honeybarrett.co.uk and they will be happy to help.
