tax on foreign income

How to Pay Tax on Your Foreign Income?

There are several cases that have been observed that people who are residents of the UK, however, they also have sources to earn foreign income. It is imperative to understand here that foreign income brings in a lot of tax liabilities which will make you pay tax on foreign income of course. How you might be able to do it is as simple as the regular tax procedure. You pay tax on this kind of income while doing your self-assessment tax returns. There are several platforms that can even help you to complete the procedures of paying tax online.

Moreover, there are frequently asked questions about the tax on foreign income that possibly includes queries about the types of foreign income on which you will pay tax, how much tax you will pay, how to prove to be a UK resident, and what is the scenario of having a permanent home abroad. On the basis of these queries, we have designed this comprehensive guide that will help to gather information about everything related to foreign income and related tax liabilities.


Talk to one of our intelligent and clever professionals to get your further queries about tax on foreign income. We will ensure to come up with the best possible solution for you.


What Kinds of Foreign Income Will I Pay Tax on?

One thing is sure there is no difference in the procedure of paying tax on any kind of foreign income just like you pay tax on UK income. However, there are certain types that can possibly be excluded from the list of tax liabilities even though they are referred to as foreign income. And then come the kind of foreign tax income that brings in tax liabilities for you. These include the following listed types of foreign income.

  1. The investments you have made in foreign
  2. The income you are getting from the rental properties from abroad.
  3. The wages you are reading from an online job overseas.
  4. The amount of money that is kept as savings.


How Much Will I have to Pay?

As it is discussed above foreign income is treated just like UK income when it comes to the procedure of paying tax. However, people still wonder a lot about how much amount in tax they owe to HMRC for the foreign income they are learning. The popular and easiest way is being used these days to know how much you will pay for foreign income tax is to use the accessible and handle online income tax calculator. Now in case the number of your profits that you have earned by selling or renting a pretty abroad goes over the limit of £12,300, you should be using the capital gains tax calculator.


How Do I Know If I’m a UK Resident?

For gathering the right kind of information about your tax liabilities, it is important to be sure about your status in the UK. Whether you are on the list of individuals who are considered UK residents or non-UK residents. You will be considered a resident of the UK by HMRC if you meet the criteria mentioned in the following:

  1. You have lived in the UK for a period of 183 days or more than this in the UK for a particular tax year.
  2. You do have a pretty in the UK or you have rented your property in the UK for a period of 90 days or more.
  3. You must have spent a period of 30 days in the same property that you own.

Moreover, sometimes the status of an individual gets changed in the same tax year. This explains that you will be liable to pay taxes on the income you are earning from the UK. This is because you are being considered a UK resident by HMRC. Sometimes people have more queries other than the details discussed here, you should always get in touch with HMRC directly to get the right kind of information in this regard.


What if My Permanent Home is Abroad?

In some scenarios, you own status of being a resident of the UK, however, your permanent home is still somewhere abroad. This will make your status as a non-domicile resident of the UK. In case of having an amount of figure £2,000 or less than this that you have kept abroad, you will not be liable to pay any tax on this amount or savings. On the other hand, if the amount is more than the figure £2,000, you will have to inform HMRC about it and submit your self-assessment tax returns. You can even claim the remittance basis.

Now if we get into the details of the remittance basis, by this you mean to pay the tax on a kind of income you have brought to the UK. This will also be applicable to claims when you have lost your right to get the tax-free amount of personal allowance or any other CGT allowance. An amount of £30,000 or £60,000 can also be a part of your payment liabilities. This totally depends on the time period you have spent in the UK as a resident.


What If I Live Abroad and Have a UK Income?

In case of the individuals who are living abroad but getting income from the UK, you will have to pay tax on this kind of income. However, you will have to gather the right kind of information on the procedure of paying taxes when you are living abroad but getting income from the UK.


The Bottom Line

Now that you have gathered a fair amount of information about how to handle tax on foreign income in the UK, we can bring the discussion towards wrapping up. This becomes a little complicated for the individuals when they aim to figure out whether they owe tax to HMRC being a  resident of the UK or not. Especially in the case of beginners who seek professional guidance on figuring out how much they owe and what are the tax liabilities that come with their kind status in the UK. We hope these few minutes of reading will help you to develop a better understanding of tax affairs when it comes to foreign income and make better choices in the future.


If you seek professional help, learn more about tax on foreign income. Why wander somewhere else when you have our young and clever team of professionals at Accotax?


Disclaimer: The information about tax on foreign income is provided in this article including text and graphics. It does not intend to disregard any of the professional advice.

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