If you are UK resident, you pay UK tax on your worldwide income as it arises — fees from overseas clients, rent from a property abroad, foreign interest and dividends — wherever it is paid. If you are not UK resident, the UK does not tax your foreign income at all. Since 6 April 2025 there is no middle way: the remittance basis is abolished and every resident is taxed on the arising basis (HMRC manual RFIG41000).
One reassurance first: receiving money from abroad is not a tax charge. Moving your own savings to the UK, or receiving a genuine gift, is not income. Tax follows what a payment is — fees, rent, interest, dividends — not the fact that it crossed a border.
This guide reflects HMRC guidance as reviewed on 2 November 2026. Rules and rates are for 2026/27 unless another tax year is shown.
Overseas income in short: residence decides whether the UK taxes it; Foreign Tax Credit Relief decides whether you pay twice; the FIG regime helps only genuine new arrivals (10 years out, first 4 years back). Everything else is reporting discipline.
It all turns on residence: the Statutory Residence Test in plain English
Residence decides everything, and the test is mechanical: the Statutory Residence Test (Finance Act 2013, Schedule 45). Work through it in order. First, the automatic overseas tests: meet one and you are non-resident, foreign income outside UK tax. GOV.UK’s summary covers fewer than 16 days in the UK (46 if you were not resident in the previous three tax years), or full-time work abroad — 35+ hours a week on average — with fewer than 91 UK days and no more than 30 UK workdays. Then the automatic UK tests (183+ days here is the best known) and, if neither set settles it, the sufficient ties test, which weighs your UK connections against your days here. HMRC’s residence status checker gives an indication; its guidance has the full rules.
Split-year treatment: arriving and leaving years
When you move to or from the UK, the tax year is usually split into non-resident and resident parts; you pay UK tax on foreign income only for the resident part. It is unavailable if you live abroad for less than a full tax year before returning; the cases are in Part 2 of Schedule 45.
Domicile no longer decides this
Before 6 April 2025, a resident whose permanent home (“domicile”) was abroad could use the remittance basis, paying UK tax only on foreign income brought into the UK. That system has gone. Guides still built around “non-dom status”, the £30,000/£60,000 charges or the old £2,000 rule describe tax years up to 2024/25, not the law now.
| Up to 5 April 2025 | From 6 April 2025 | |
| Basis of taxation | Remittance basis for non-doms | Arising basis for all residents |
| New-arrival relief | Remittance basis + annual charges | 4-year FIG regime (10 years non-resident first) |
| Small amounts left abroad | No UK tax under £2,000 if kept abroad | No equivalent — the £2,000 rule has gone |
| Bringing money to the UK | A taxable remittance | Free for relieved FIG; TRF at 12%/15% for old money |
What counts as overseas income for a small business
Foreign income is any income from outside England, Scotland, Wales and Northern Ireland (the Channel Islands and Isle of Man count as foreign) — for a small business owner, usually one of these. Where the money is banked, and in which currency, change nothing; converting it into sterling is a reporting step (see the checklist below).
| Income | How it is taxed | Where you report it | Relief for foreign tax |
| Fees from overseas clients, work done in the UK | Trading income, like UK client fees | Self-employment pages | Credit if tax was withheld |
| Profits of a trade carried on wholly abroad | Foreign income | Foreign pages (SA106) | Foreign Tax Credit Relief |
| Rent from a property abroad | Property income | Foreign pages (SA106) | Foreign Tax Credit Relief |
| Interest on overseas accounts | Savings income | Foreign pages (SA106) | Foreign Tax Credit Relief |
| Dividends from foreign companies | Dividend income | Foreign pages (SA106)* | Credit (special rules: HS263) |
| Foreign pension | Pension income | Foreign pages (SA106) | Often relief at source |
*Unless the narrow no-return case described below applies.
Money from abroad that is not income
Three common receipts are not income at all: moving your own savings between accounts, a genuine gift, and drawing down or repaying loan capital.
Sole trader with overseas clients: usually just trading income
If you do the work from the UK, fees from overseas clients are ordinary trading income: taxed exactly like UK client fees and reported on the self-employment pages — not the foreign pages. If you are weighing up sole trader vs limited company, overseas clients do not change that comparison, and allowable expenses work as normal.
The three traps
Withholding tax. Some countries and clients deduct tax at source from payments to non-residents. Report the gross fee, keep the withholding certificate, and claim Foreign Tax Credit Relief on the tax withheld.
A trade actually carried on abroad. A real business run wholly outside the UK — a shop, a practice, staff overseas — is different: its profits are foreign income, reported on the foreign pages. HMRC’s FIG guidance confirms only a trade “carried on wholly outside the UK” can be qualifying foreign income (s.845H ITTOIA 2005) — UK-based remote work never falls into this category.
Platform income. Being paid through an app or marketplace does not turn trading income into investment income. Selling your time or products makes it trading income, wherever the platform is based.
Limited company selling abroad: worldwide profits, one tax return
A UK-resident limited company pays Corporation Tax on all its profits wherever they arise — s.5 CTA 2009. Sales to overseas customers are ordinary trading turnover on the company’s CT600, taxed exactly like UK sales.
When foreign tax has been withheld from company income
If tax has been withheld abroad from a company payment, the company claims Double Taxation Relief — the company version of FTCR — in its Corporation Tax computation. The credit is capped at the UK tax on the same income (Part 2 of TIOPA 2010). It must be claimed; keep the withholding evidence.
Two specialist lines, flagged as such
Most dividends a UK company receives from another company, UK or foreign, are exempt from Corporation Tax under Part 9A of CTA 2009 — with conditions and anti-avoidance rules attached. And if the company trades through an overseas branch or a connected overseas company rather than simply selling abroad, different rules apply, including transfer pricing. Both are “take advice” territory, not DIY filing.
Overseas rent, interest and dividends (you personally)
Investments in your own name are taxed on you personally, not through your business: foreign rent, interest and dividends are taxed much like their UK equivalents, on the foreign pages, with Foreign Tax Credit Relief for tax paid abroad.
Rent from a property abroad
You work out the profit the normal way — rent less allowable costs — and pay tax at your usual rates. The trap is losses: the overseas property business is kept separate, so a loss on a property abroad can only be set against profits from other overseas properties, never against UK rents or other income (GOV.UK’s foreign income guidance).
Foreign dividends and interest — and the one small exception
Foreign dividends and interest are taxed as dividend and savings income. One small-amount escape exists, and it is narrow: you need not file a return if your only foreign income is dividends, your total dividends — UK and foreign together — are below the £500 dividend allowance for 2026/27, and you have no other income to report. Interest has no equivalent escape, and the exception is about whether you must file, not a tax-free allowance. Overseas dividends are personal income: they sit outside the company and stack on top of salary and UK dividends.
Taxed twice? Foreign Tax Credit Relief
If the same income is taxed abroad and in the UK, Foreign Tax Credit Relief (FTCR) credits the foreign tax against the UK tax on that same income. Done properly, you pay the higher of the two bills — not both. The credit is the lower of the foreign tax paid and the UK tax on that income (limits: ss.36 and 40–42 TIOPA 2010); HMRC’s helpsheet HS263, Relief for foreign tax paid, works through the calculation. Relief is usually available even with no double taxation agreement, if the foreign tax corresponds to UK Income Tax or CGT. Claim source by source — and the income must be declared to get the credit.
Credit or deduction?
You can instead treat the foreign tax as a deduction — an expense set against the income. You cannot do both: s.31 TIOPA 2010 bars a deduction where credit is claimed. The worked example prices the choice: a credit is worth the tax itself; a deduction only your tax rate multiplied by the tax.
Relief at source and certificates of residence
Sometimes there is no double tax to relieve: the treaty exempts the income abroad in the first place (GOV.UK gives most pensions). The claim then happens in the other country, proving UK residence with an HMRC-certified form or a UK certificate of residence. And if the treaty requires claiming the tax back from the source country, FTCR is not available in the UK instead.
Worked examples: the numbers
Examples A and B use the same person: a UK-resident sole trader, basic-rate (20%) in 2026/27, whose other income has used her personal allowance — so all overseas income here is taxed at 20%.
Example A — rent from a flat abroad. The flat lets for £10,000 gross in 2026/27 (sterling equivalent); the foreign country taxes it at 15% (£1,500). UK tax before relief: £10,000 × 20% = £2,000. FTCR is the lower of £1,500 and £2,000 — credit £1,500, UK bill left £500, total across both countries £2,000: the higher of the two bills, not the sum.
If she never claims, she pays £1,500 plus £2,000: £3,500. The claim — one calculation on the foreign pages — is worth £1,500. The deduction route instead gives UK tax of (£10,000 − £1,500) × 20% = £1,700: a £3,200 total, £1,200 worse than the credit.
The cap bites the other way too: at a 24% foreign rate (£2,400 paid) the credit is capped at £2,000, the total stays £2,400 and the £400 excess is lost — no refund, no set-off. At a 40% UK rate: UK tax £4,000, credit £1,500, top-up £2,500.
| Case (rent of £10,000) | Foreign tax | UK tax | Credit | Total tax paid |
| Foreign rate 15%, UK rate 20% | £1,500 | £2,000 | £1,500 | £2,000 |
| Foreign rate 24%, UK rate 20% | £2,400 | £2,000 | £2,000 (capped) | £2,400 |
| Credit never claimed | £1,500 | £2,000 | £0 | £3,500 |
Example B — overseas clients. A UK-based consultant invoices clients in the US and Germany £30,000 across 2026/27, all work done from her UK home. That is ordinary trading income, joining her UK fees on the self-employment pages at exactly the cost of £30,000 of UK fees — no foreign pages, no special computation. The one variation: a client withholding 10% (£3,000) under local rules — she reports the gross £30,000, keeps the certificate and claims up to £3,000 of FTCR against the UK tax on those fees, as in Example A.
Example C — a director’s foreign dividends. A director’s overseas shares pay £3,000 of dividends, 15% (£450) withheld abroad. Assume his salary has used his personal allowance and the dividends are basic-rate: with the £500 dividend allowance and the 10.75% basic rate for 2026/27, UK tax before credit is (£3,000 − £500) × 10.75% = £268.75. HS263 makes the credit the smallest of the UK tax, the foreign tax paid and any treaty limit: £268.75. The UK bill drops to nil; £181.25 of foreign tax is unrelieved, not repayable. For dividends the foreign withholding rate matters more than the UK rate — check it before you buy.
Three takeaways: claim the credit — it is worth real money. Excess foreign tax above the UK bill is lost — check the treaty position before income is paid. The deduction route is a fallback, not a rival.
Recently moved to the UK? The 4-year FIG regime (and the closing TRF window)
One genuine relief exists for new arrivals, and it is tightly drawn. A “qualifying new resident” — UK resident under the SRT, and not UK resident in any of the 10 consecutive tax years immediately before (s.845B ITTOIA 2005; RFIG44000) — can claim relief on foreign income and gains arising in their first 4 tax years of residence. Nationality and domicile are irrelevant, and 2022/23-onwards arrivals can use the window years they have left. Relieved amounts can be brought into the UK freely, with no further charge — the opposite of the old remittance basis. But relief is never automatic: claim it, source by source, in the Self Assessment return for each year (RFIG42100), by 31 January twelve months after that year’s filing date (RFIG42300).
The price of claiming: your allowances
Claiming is a calculation, not a reflex: in a claim year (or an Overseas Workday Relief election year) you lose your personal allowance (£12,570 for 2026/27) and your CGT annual exempt amount (£3,000 for 2026/27) — RFIG43000; s.1K(6)(b) TCGA 1992. On £8,000 of foreign interest, relief at 20% saves at most £1,600; a lost personal allowance can cost up to £2,514 at 20%. Only income arising on or after 6 April 2025 counts, and only “qualifying foreign income” — including wholly-foreign trade and overseas property business profits, but not foreign employment income (next section).
Overseas Workday Relief in one paragraph
Qualifying new residents who work partly abroad can claim Overseas Workday Relief on pay for overseas workdays, for up to 4 years. From 6 April 2025 it is capped at the lower of 30% of relevant qualifying employment income or £300,000 a year (s.41R ITEPA 2003; EIM43600). (Employers: a s.690 direction lets PAYE run on only part of the pay.)
Old money: the closing TRF window
The Temporary Repatriation Facility is for people who used the remittance basis before April 2025 and still hold foreign income and gains from those years offshore. They designate amounts in their return and pay a flat TRF charge instead of normal rates — 12% (2025/26 and 2026/27 designations), 15% (2027/28) (HMRC manual RDRM73400) — and designated amounts can then be brought in at any time, tax-free. The window closes after 2027/28: legacy money, specialist territory — take advice.
If you have lived in the UK for years, none of this section applies to you. Your relief is Foreign Tax Credit Relief, full stop.
How to report it: the Self Assessment checklist
Foreign income goes in a Self Assessment tax return, in the foreign pages — paper SA106; the same sections appear online. Our guide to UK small business tax returns covers the wider picture; the foreign-income steps are these:
- Register by 5 October following the tax year if you do not already file — see our guide to registering a UK small business. Miss it and the year starts with a penalty risk.
- Gather the figures source by source, by country: gross income and foreign tax paid, with the tax certificate or statement for each source.
- Convert to sterling. Use the spot rate when the income arose or, for income arising regularly across the year (rent, interest), HMRC’s published average rates — it publishes monthly, yearly average and spot rates on GOV.UK. One method per source, consistently, rate noted. Foreign tax paid is converted too, for the credit calculation (HS263 has the working sheet).
- Complete the foreign pages (SA106). UK-based trading income stays on the self-employment pages; genuinely foreign income goes on the foreign pages.
- Claim Foreign Tax Credit Relief in the same return — the credit can only be given against income you have declared.
- File and pay on time: 31 October (paper); 31 January (online filing and payment).
| Date or window | What it is |
| 5 October | Register for Self Assessment (new filers) |
| 31 October | Paper return filing deadline |
| 31 January | Online filing deadline, and the payment deadline |
| First 4 tax years of residence | FIG claim window (new residents) |
| 2025/26 to 2027/28 | TRF designation window — 12%, 12%, then 15% |
Risks and common mistakes
- Assuming income left in a foreign bank account escapes UK tax. It does not: since April 2025 you are taxed on worldwide income as it arises, wherever it sits.
- Planning around abolished rules — the £2,000 rule, remittance-basis charges, “non-dom” planning — from guides never updated after April 2025.
- Paying tax twice by never claiming Foreign Tax Credit Relief — or claiming the credit and deducting the same tax as an expense.
- Claiming too much credit, or claiming without evidence. The credit cannot exceed the UK tax on that income, and certificates must be obtained and kept — HMRC can ask (INTM162530).
- Using the wrong pages: UK-based client fees on the foreign pages; a genuinely foreign trade on the self-employment pages.
- Missing the 5 October registration deadline in the first year you have overseas income.
- Mixing exchange-rate methods for the same source — a one-off favourable spot rate here, averages there.
- Blurring personal and company money. Foreign dividends are the director’s income; export sales are the company’s turnover.
- Forgetting the other country’s duties. A UK credit cancels no foreign return; some income must be relieved at source, not by credit.
- New arrivals missing out twice over: never claiming FIG relief, because it is not automatic — or claiming blindly and losing the personal allowance for less than it costs.
Conclusion
Three questions decide almost every case. Are you UK resident? If yes, your worldwide income is taxed here as it arises — no remittance basis shelters it. Have you paid tax abroad on the same income? Then Foreign Tax Credit Relief, claimed in your return and capped at the UK tax on that income, stops you paying twice. Are you a genuine new arrival, 10 years out and inside your first 4 years back? Only then does the FIG regime enter the picture, and only once you have priced the personal allowance it costs. Get those answers right, keep your foreign tax evidence, and the rest is reporting discipline. See also our 7 tax tips for UK small business owners.
Frequently asked questions
Do I pay UK tax on money I earn from overseas clients?
Yes, if you are UK resident — and work done from the UK is simply trading income, taxed and reported like UK client fees. The client’s location matters only if tax was withheld abroad, reclaimed through Foreign Tax Credit Relief.
The money stays in a foreign bank account — is it still taxable?
Yes. Since 6 April 2025 residents are taxed on worldwide income as it arises; no remittance basis shelters money left abroad. The old rules survive only up to 2024/25.
I already paid tax abroad. Do I pay again in the UK?
Report the income and claim Foreign Tax Credit Relief: the foreign tax is credited against the UK tax on the same income, capped at whichever is lower — you pay the higher of the two bills, not both.
Is there a tax-free amount for foreign income — what about the £2,000 rule?
Not any more: it applied only to non-domiciled residents, only to money kept abroad, and only up to 5 April 2025. The one escape now — no return is needed if your sole foreign income is dividends and total dividends, UK and foreign together, are within the £500 dividend allowance, with nothing else to report.
I moved to the UK recently — can I get the 4-year FIG relief?
Only if you were non-UK resident for the whole of the 10 years before becoming resident, and only for foreign income arising in your first 4 years of residence. Claim in your return, source by source — and note claiming costs your personal allowance for that year.
How do I convert foreign currency income into sterling?
Use the spot rate when the income arose, or HMRC’s published average rates for income arising regularly across the year — one method per source, consistently, with the rate noted.
Is transferring my own savings from abroad taxable?
No. Moving your own capital, or receiving a genuine gift, is not income: tax follows what a payment is, not the fact that it crossed a border.
My limited company sells to customers abroad — is that taxed differently?
No: a UK company pays Corporation Tax on worldwide profits, and export sales are ordinary CT600 turnover. Complications start only if a foreign country withholds tax (claim Double Taxation Relief) or you trade through an overseas branch or company.
This article is general information for UK small businesses, not tax advice for your specific circumstances. Overseas income cases turn on your residence position, the source country and any treaty — take advice from a qualified tax adviser before acting, especially on FIG claims and TRF designations.
