Foreign Income Declaration UK: What Expats and UK Residents Need to Know

Earning income from abroad while living in the UK? 

Whether you’re receiving rental income from your property in Spain, dividends from a foreign company, or a pension from overseas, you may be legally required to declare it to HMRC.

Unfortunately, many UK residents are unaware of what exactly qualifies as foreign income, when they need to declare it, or how the remittance basis affects their tax bill. The rules aren’t just confusing, they’re easy to misinterpret. And worse, getting it wrong can trigger penalties.

But with the right knowledge and advice, declaring foreign income doesn’t have to be daunting. Whether you’re a UK expat, a non-domiciled resident, or simply someone with overseas investments, this post will walk you through exactly what you need to know.

Alright, now let’s simplify the process and make sure you’re ticking all the right boxes to stay compliant while keeping more of your hard-earned money. 

Here’s what you need to know.

What Counts as Foreign Income for UK Tax Purposes?

Foreign income is any income earned outside of the UK. HMRC expects UK tax residents to report their worldwide income, even if it’s never brought into the UK.

Here are some common examples that count as foreign income:

• Rental income from overseas property
  e.g. a villa in Greece or apartment in Dubai
• Overseas employment income
  If you work for a foreign company or are seconded abroad
• Foreign dividends and interest
  e.g. shares in a US company or savings accounts held abroad
• Foreign pensions or annuities
  Retirement income paid from an overseas pension scheme
• Trust or estate income
  Distributions from a foreign trust or inheritance
• Self-employment or business income earned abroad
  Particularly relevant for remote workers or freelancers working internationally

Who Needs to Report This?

If you’re a UK resident, you are generally required to pay UK tax on all global income, unless you are claiming the remittance basis (more on this in future sections). But even then, certain income types might still be taxable.

Keep in mind: your domicile status also plays a role in what needs to be declared. For example, non-doms who elect for the remittance basis may only pay UK tax on income brought into the UK.

For more info on this see the HMRC guidance on foreign income

When and How to Declare Foreign Income to HMRC

When Should You Declare It?

You should declare foreign income:

• By the Self Assessment tax return deadline (usually 31 January following the tax year)
  
• Whenever you receive any form of income from a non-UK source
  
• Even if the income remains abroad (unless you’re non-domiciled and using the remittance basis)
  

Failing to report income can result in significant penalties, particularly if HMRC believes it was deliberate.

How to Declare It

To report foreign income, you must:

1. Register for Self Assessment
   If you’re not already doing so, you’ll need to register with HMRC. You can do this online here.
   
2. Fill out the Foreign Pages (SA106)
   These pages are part of the Self Assessment tax return and specifically deal with income from overseas. You’ll need to break down:
   
   • The type of income (e.g. rental, dividends, employment)
     
   • The country it was earned in
     
   • The foreign tax paid, if any
     
3. Apply for Foreign Tax Credit Relief (if eligible)
   If you’ve already paid tax on the income abroad, you may be eligible to offset it using the UK’s double taxation agreements. This avoids paying tax twice.
   
4. Use the right exchange rate
   HMRC expects foreign income to be converted to GBP using their approved exchange rates for the year.
   

What If You Missed a Declaration?

If you realise you’ve failed to declare foreign income from previous years, it’s wise to make a voluntary disclosure before HMRC catches on. The Worldwide Disclosure Facility allows individuals to correct past mistakes with reduced penalties but only if you act before HMRC opens an investigation.

Double Taxation: What Reliefs Are Available?

One of the most common concerns UK residents face when declaring foreign income is the fear of being taxed twice once by the foreign country where the income originated, and again by HMRC in the UK. 

Thankfully, the UK has double taxation agreements (DTAs) with many countries to avoid this exact problem.

What is Double Taxation Relief?

Double taxation relief is a tax credit or exemption that ensures you don’t pay tax twice on the same income. If you’ve already paid tax on foreign income in another country, the UK may either:

• Give you a credit for the foreign tax paid, which reduces your UK tax liability
• Exempt the income from UK tax entirely (in limited cases)

These reliefs apply only if the UK has a DTA with the country where your income originates. HMRC maintains a list of countries with double taxation treaties which outlines what relief is available and under what terms.

How to Claim Relief

When you fill out the Foreign Pages (SA106) of your Self Assessment tax return, you must:

• Specify the type of income (dividends, property, pension, etc.)
  
• Note the amount of tax paid abroad
  
• Choose whether to claim Foreign Tax Credit Relief or Exemption
  

If unsure which option is better, a qualified tax adviser can help optimise your return.

Tip: You can’t claim both exemption and credit on the same income, you must choose one.

Common Penalties for Undeclared Foreign Income in the UK

The consequences of not declaring foreign income in the UK can be expensive and stressful. 

HMRC takes non-compliance seriously, especially if they suspect deliberate concealment. The penalties vary based on the nature of the error and how it’s resolved.

Types of Penalties You Might Face

1. Failure to Notify Penalty
   If you don’t inform HMRC that you owe tax on foreign income, penalties can go up to 30% of the unpaid tax.
   
2. Late Filing Penalties
   A missed tax return deadline triggers an immediate £100 penalty, even if you owe no tax. The longer you delay, the worse it gets.
   
3. Inaccuracy Penalty
   If HMRC finds your tax return includes incorrect figures, you can be fined up to 70% of the tax underpaid especially if it was deliberate.
   
4. Offshore Penalty Regime
   HMRC applies enhanced penalties for offshore non-compliance, with fines ranging from 100% to 200% of the unpaid tax depending on the jurisdiction.
   

How to Avoid Penalties

• Declare all relevant foreign income in your Self Assessment return no matter how small
  
• Keep clear records of income sources, amounts, dates, and foreign tax paid
  
• Disclose voluntarily if you’ve made a mistake use the Worldwide Disclosure Facility to reduce penalties
  

If HMRC finds errors before you do, expect higher fines and possible interest on unpaid tax.

Special Considerations for UK Expats and Non-Doms

If you’re a UK resident with ties to another country whether by citizenship, domicile, or income sources, you may qualify for special tax treatment. But you’ll also have unique risks and responsibilities when it comes to declaring foreign income.

Understanding Non-Domiciled (Non-Dom) Status

If you’re considered non-domiciled in the UK, usually you have two tax options:

1. Arising Basis
   Pay UK tax on all worldwide income as it arises just like regular UK residents.
   
2. Remittance Basis
   Pay UK tax only on foreign income or gains you bring into (remit to) the UK.

But it is worth noting that as from 6th April, 2025, the rules changed. The arising vs remittance basis no longer applies. It is the Foreign Income and Gains (FIG) regime that is in use now.

Tax Considerations for UK Expats

If you’ve moved abroad but still receive UK income or own UK assets, you may:

• Still be considered UK tax resident depending on the Statutory Residence Test
  
• Be taxed on rental income, UK pensions, or business profits
  
• Need to submit a Self Assessment return even if you live elsewhere
  

Always assess your residency status carefully and seek professional advice if you’ve returned to the UK or live between countries.

Pro tip: Just because you’re abroad doesn’t mean HMRC has forgotten you and overseas income is a hot focus area for tax compliance.

When to Hire a Tax Advisor for Foreign Income Reporting

Declaring foreign income might sound simple on the surface, but the moment offshore assets, dual residency, or non-dom status come into the picture, it quickly becomes complex. 

That’s why knowing when to bring in a qualified tax advisor can save you from unnecessary stress, tax penalties, and missed relief opportunities.

Here’s when you should consider hiring a UK tax advisor:

1. You have multiple sources of foreign income
   Whether it’s rental property abroad, dividends from foreign shares, or a pension from another country, a tax advisor can help you determine how to declare each one correctly and what reliefs you can claim.
   
2. You’re unsure of your tax residence status
   The Statutory Residence Test is not always clear-cut. If you split time between the UK and abroad, a tax advisor can determine your residency position and guide your reporting obligations.
   
3. You’re a non-dom using the remittance basis
   Navigating the remittance basis rules, claiming reliefs, and deciding whether the charge is worth paying is best done with expert input. Mistakes can be costly both in tax and penalties.
   
4. You’re at risk of double taxation
   An advisor can apply the correct double tax reliefs and avoid overpayment. They’ll also know which treaty terms apply to your situation saving you hours of research.
   
5. You’ve made past mistakes or omissions
   If you’ve undeclared income from previous years or suspect there may be errors in your foreign pages, a tax expert can help you disclose to HMRC through the Worldwide Disclosure Facility and potentially reduce your penalties.
   
6. You want peace of mind and confidence
   Beyond just compliance, working with an advisor gives you clarity, confidence, and a clear plan. You’ll spend less time worrying and more time focusing on your global wealth goals.
   

At Monarc, we specialise in helping UK taxpayers with complex international affairs from high-net-worth expats to globally mobile professionals. If you’re unsure about a single figure on your return, it’s worth having a chat.

Conclusion

Finding your way around the waters of foreign income declaration in the UK might seem difficult but with the right knowledge, it becomes a structured, manageable process.

Whether you’re receiving overseas dividends, rental income from a property abroad, or income from a family trust, you now know what counts as foreign income, how to declare it, when tax reliefs apply, and when the stakes are high enough to call in expert help.

And remember,  when it comes to HMRC, being proactive beats being reactive. The taxman’s net is widening when it comes to offshore income. But you don’t have to get caught off guard.

With good records, the right guidance, and timely reporting, you can remain tax compliant while optimising your global income.

Need help making sense of your foreign income? Talk to a UK tax expert today. Let’s take the confusion out of compliance and give you the confidence to grow globally.