Key points
- A UK tax resident is taxed on worldwide income: wages, self-employment, rent, interest and dividends from abroad.
- All foreign income is converted into pounds. Documents can stay in their original language; HMRC can ask for translations of the ones it wants to see.
- A double tax treaty usually lets you deduct tax paid abroad, so you only top up the difference in the UK. Without one, you can pay twice.
- The new 4-year FIG regime can exempt foreign income for newcomers, but you lose your £12,570 Personal Allowance for that year.
The most common mistake
Not knowing that foreign income must be declared
People move to Britain while still working, or running their own business, in another country. Many simply do not know that once they are UK tax resident, that salary and that self-employment income are taxable in the UK and must be shown on a Self Assessment return, in the foreign income pages.
The same applies to a UK resident who runs a business in any other country, earns in several currencies, or sells goods or services abroad. It is all part of your income here.
Currencies and foreign documents
- Everything in pounds. All income is converted to sterling. Use a consistent method, for example HMRC's monthly or yearly average exchange rates, and keep a record of which rates you used.
- Documents do not have to be in English. If you trade with France, your invoices can be in French. You can make them bilingual from the start, or translate them only if HMRC asks during a check, and then only the documents it asks for. HMRC is quite reasonable here.
Rent, shares and dividends abroad
Foreign income is not only work. It also includes passive income: rent from a flat abroad, interest, and dividends from shares or from a company you own in another country.
Many countries take tax at source on these, for example withholding tax on dividends or tax on rent. That is where treaties matter.
Double tax treaties: check before you start
Before you plan a business, an investment or a property abroad, check the double tax treaty between the UK and that country.
With a treaty
- Tax paid abroad is credited against UK tax on the same income.
- You only top up the difference in the UK, if any.
Without a treaty, or if you ignore it
- You can pay full tax abroad and full tax again in the UK.
- Some relief may still be available, but often less.
You receive £10,000 of rent from a flat abroad, and that country taxes it at 15%: £1,500. You are a higher-rate taxpayer in the UK, so UK tax on the rent is 40%: £4,000. With the treaty, you deduct the £1,500 and pay £2,500 in the UK. Without it, you could pay £5,500 in total.
Your rates are dynamic
Foreign income is added to your UK income, and taxed at your own rates on your Self Assessment. Up to £50,270 of total income, the rate is 20%; above that 40%, and above £125,140 45%. So foreign income can push your UK income into a higher band. Scotland has its own bands for non-savings income.
The 4-year FIG regime
Since 6 April 2025, the old "non-dom" remittance basis has gone. In its place is the foreign income and gains (FIG) regime.
- Who: anyone who becomes UK tax resident after at least 10 consecutive tax years of not being UK resident. That includes British citizens returning after a long time abroad, people with UK residence permits who lived abroad, and new arrivals.
- How long: the first 4 tax years of UK residence.
- What: qualifying foreign income and gains can be exempt from UK tax, at 0%, even if you bring the money to the UK.
- How: you choose it on your tax return, year by year, and you do not have to claim it for every source of foreign income. You can claim it one year and not the next.
Is a foreign business covered?
The regime is aimed at passive foreign income: rent, interest, dividends, gains. Employment income is not covered (it has its own, narrower relief). A foreign business can be covered, but only if the trade is carried on wholly outside the UK.
Can be argued as covered
- The business abroad has its own staff, premises and managers who make decisions there.
- You simply receive the profit.
Not covered
- You are self-employed in another country but do the work from the UK.
- No staff or office there: it is your active income from the UK.
The hidden cost of FIG
In any year you claim FIG, you lose the £12,570 Personal Allowance, and the capital gains annual exemption. Your UK income is taxed from the first pound. So you can end up paying more tax on your British income than you expected. You must also still report the foreign income on the return, even though it is exempt.
That is why the decision has to be made each year with real figures. The calculator below shows the basic trade-off.
FIG or not? A quick calculator
Resident in two countries at once
People who move often remain tax resident in the country they left, and become tax resident in the UK too. Each country taxes them on worldwide income. This is a serious problem that people rarely notice until both countries ask for tax.
The UK's Statutory Residence Test decides whether you are resident here. The treaty's tie-breaker rules then decide which country has the main right to tax. You need to know which reports go to which country, and where tax is paid.
What to prepare
0 of 6 ready
One piece of advice
If you have income or assets in more than one country, choose not just an accountant, but an accountant with legal training, who can analyse international agreements and the laws of both countries, and tell you as a whole which reports go where and where tax is paid.
Test yourself
1. You live in the UK and still earn a salary from a job in Poland. Do you declare it here?
A UK resident is taxed on worldwide income. Tax paid in Poland is usually credited under the treaty.
2. Your invoices to French clients are in French. What does HMRC need?
Records can be in another language. HMRC can ask for translations during a check.
3. What do you lose in a year you claim the FIG regime?
The Personal Allowance and the capital gains annual exemption are lost for that year.
4. You are self-employed in Spain, but do all the work from your home in Manchester. Is it covered by FIG?
Only a trade carried on wholly outside the UK can qualify.
Law and sources
- GOV.UK: tax on foreign incomeWhat UK residents must declare
- HMRC RDR3: Statutory Residence TestWhether you are UK tax resident
- GOV.UK: foreign income and gains regimeThe 4-year regime from 6 April 2025: who qualifies and what you lose
- Income Tax (Trading and Other Income) Act 2005, section 830What counts as relevant foreign income
- Taxation (International and Other Provisions) Act 2010, Part 2Relief for foreign tax under double tax treaties
- GOV.UK: tax treatiesThe UK's double taxation agreements, country by country
- GOV.UK: HMRC exchange ratesMonthly and yearly average rates
This guide explains the rules in general terms as at 5 October 2026. It is not advice for your situation. Each treaty is different.
