Overview of foreign income taxation

18 December 2019

Income Tax is generally payable on taxable income received by individuals including earnings from employment, earnings from self-employment, pensions income, interest on most savings, dividend income, rental income and trust income. The tax rules for foreign income can be very complex.

However, as a general rule if you are resident in the UK you need to pay UK Income Tax on your foreign income, such as:

• wages if you work abroad
• foreign investments and savings interest
• rental income on overseas property
• income from pensions held overseas

Foreign income is defined as any income from outside England, Scotland, Wales and Northern Ireland. The Channel Islands and the Isle of Man are classed as foreign.

If you are non-UK resident, you do not usually have to pay UK tax on your foreign income. There are special rules if you work both in the UK and abroad. The rules become even more complicated when looking at the liability to UK Income Tax for non-domiciles spending a substantial amount of time in the UK.

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