Last updated: 16 October 2026
What did the UK and Ecuador agree?
The UK and Ecuador signed their first comprehensive double taxation treaty on 7 August 2024, and it entered into force on 19 December 2024. According to HMRC’s Double Taxation Relief Manual (DT6400), it has effect in the UK from 1 January 2025 for taxes withheld at source, from 6 April 2025 for income tax and capital gains tax, and from 1 April 2025 for corporation tax. It sets out which country can tax income and gains for people and businesses with links to both. It covers UK income tax, corporation tax and capital gains tax, and the equivalent Ecuadorian taxes, and includes limits on withholding taxes on dividends, interest and royalties.
What is a double tax treaty?
A double taxation agreement (DTA) is a treaty between two countries that stops the same income being taxed twice, or reduces the extra tax. The UK has one of the largest treaty networks in the world, with agreements with more than 130 countries.
What treaties usually cover
| Area | Typical treaty rule |
| Residence | Tie-breaker tests decide which country you are resident in for treaty purposes |
| Employment income | Usually taxed where the work is done, with exceptions for short visits |
| Business profits | Taxed where the business is resident unless it has a permanent establishment in the other country |
| Dividends, interest and royalties | Reduced withholding tax rates at source |
| Pensions | Often taxed only in the country of residence |
| Property income | Taxed where the property is located |
Foreign tax credit relief
If you are UK resident and pay tax abroad on foreign income, you can usually claim foreign tax credit relief on your UK tax return. The relief is the lower of the foreign tax paid and the UK tax on that income. If there is no treaty, the UK still gives unilateral relief in many cases.
Example
A UK resident consultant earns £20,000 from a project in Ecuador and pays tax there. The treaty decides which country has first taxing rights. If Ecuador may tax the income, the UK still taxes it as part of her worldwide income, but she claims a credit for the Ecuadorian tax, up to the UK tax due on that £20,000.
How to claim treaty relief
- Individuals report foreign income and claim credit relief on the foreign pages of their Self Assessment return.
- Non-residents receiving UK income can apply to HMRC using the relevant treaty form to have tax reduced at source.
- Companies claim relief in their Company Tax Return.
Keep evidence of foreign tax paid, such as tax certificates.
Residence still matters
Treaties do not replace the UK’s statutory residence test. You first work out your residence under UK law, then apply the treaty if you are resident in both countries.
Frequently asked questions
When does the UK-Ecuador treaty take effect?
It already applies: in the UK from 6 April 2025 for income tax and capital gains tax, 1 April 2025 for corporation tax and 1 January 2025 for withholding taxes.
Does a treaty mean I pay no UK tax?
Not always. It decides which country taxes first and how much relief is given.
Do I need to declare foreign income if I paid tax abroad?
Usually yes, if you are UK resident.
Is there a treaty with every country?
No. Some countries have no treaty, and unilateral relief may apply.
Related: is a foreign inheritance taxable, working abroad and your tax return and fees through a Spanish company.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with foreign income and double taxation relief. See our personal tax accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 16 October 2026. It is not personal advice, so speak to an accountant about your own situation.
