UK Tax on Foreign Income Complete: 2026/27

UK Tax on Foreign Income Complete 2026/27 Guide

Q: How is foreign income taxed for UK residents in 2026/27?

UK-resident individuals taxed on WORLDWIDE income on arising basis (when earned). Statutory basis: Section 6 ITA 2007 (UK residence) + various income source rules. Default position : foreign salary, rental, dividends, interest, business profits, capital gains all subject to UK Income Tax / CGT at marginal rates. Major exception - FIG regime : from 6 April 2025, new UK arrivers get 4-year FIG (Foreign Income and Gains) exemption. Foreign income/gains within window NOT taxed in UK. See FIG deep-dive guide . Foreign Tax Credit Relief (FTCR) : tax paid in foreign country credited against UK tax on same income. Prevents double taxation. Statutory basis: Section 18 + Schedule 4 TIOPA 2010. Worked example - £80,000 UK salary + £20,000 US dividends : UK tax: total £100k income. £20k US dividends taxed at 33.75% (higher-rate) = £6,750 UK tax. US withholding tax: 15% (treaty rate with W-8BEN) = $3,000 = £2,250. FTCR credit: £2,250. Net UK tax on US dividends: £6,750 - £2,250 = £4,500. Reporting on Self Assessment : foreign income declared on SA106 (Foreign supplementary pages). Each income type with country + gross income + foreign tax paid. Currency conversion : use HMRC's average exchange rate for the year OR spot rate at receipt. Be consistent across year. Don't forget : even if no UK tax due (low income, full FTCR), still must report.

Q: What is the Statutory Residence Test (SRT)?

SRT : statutory framework determining UK tax residence. Statutory basis: Schedule 45 Finance Act 2013. Three-test structure : (1) Automatic Overseas Test : if ANY applies = automatically non-UK resident. E.g., < 16 UK days in year, OR < 46 days + not been UK-resident in 3 prior years, OR full-time work overseas. (2) Automatic UK Test : if any applies = automatically UK resident. E.g., >= 183 days UK, OR only home in UK for 91+ days, OR full-time UK work. (3) Sufficient Ties Test : residual category. UK days + UK ties determine residence. UK ties : family tie (UK-resident spouse / partner / minor child), accommodation tie (UK accommodation available for 91 days + used at least once), work tie (40+ UK workdays), 90-day tie (90+ days UK in either of prior 2 years), country tie (UK days exceed any other country - applies only for "leavers"). Sufficient ties thresholds for arrivers (not UK-resident in any of prior 3 years): 183+ days = always resident. 121-182 days = resident if 1+ tie. 91-120 days = resident if 2+ ties. 46-90 days = resident if 3+ ties. 16-45 days = resident if 4+ ties. For leavers (UK-resident in any of prior 3 years): lower thresholds + country tie. Split year treatment : arrival or departure year can be split into UK-resident + non-resident portions. 8 cases for split-year treatment in HMRC RDR3 manual.

Q: How does Foreign Tax Credit Relief (FTCR) work?

FTCR : relief preventing double taxation when same income taxed in foreign + UK. Statutory basis: Section 18 + 26-30 + Schedule 4 TIOPA 2010. Mechanics : Step 1 : foreign income subject to foreign tax (withholding, foreign assessment). Step 2 : UK calculates tax on the foreign income at UK rates. Step 3 : lesser of (foreign tax paid) or (UK tax on same income) = FTCR credit. Worked example - £20k US dividends, 15% US WHT : foreign tax £3,000. UK tax on £20k dividend at higher-rate 33.75% = £6,750. FTCR = lesser of £3,000 or £6,750 = £3,000. Net UK tax payable on dividends: £6,750 - £3,000 = £3,750. Worked - foreign tax exceeds UK tax : £10k French dividends, 25% French tax = £2,500. UK tax £10k × 33.75% = £3,375. FTCR = £2,500 (lesser of). Net UK tax £875. Worked - excess foreign tax : £5k Belgian dividends, 30% withholding = £1,500. UK basic-rate dividend tax = £5k × 8.75% = £437. FTCR capped at £437. £1,063 of foreign tax UNRELIEVED + LOST. Cannot offset against other UK income : excess foreign tax doesn't reduce UK tax on UK-source income. Treaty rates : often lower than statutory foreign rates if claimed via W-8BEN (US), CERFA forms (France) etc. Claiming treaty rate at source maximises FTCR efficiency. Mixed income types : separate FTCR computation per income source + per country. Cannot pool foreign taxes across countries.

Q: How do double tax treaties work?

UK has 130+ bilateral double tax treaties with countries. Allocate taxing rights between countries to prevent double taxation. Statutory basis: Sections 2-17 TIOPA 2010 + individual treaty texts. How treaties allocate taxing rights : (1) Pure residence-based : only resident country taxes. E.g., business profits without permanent establishment in source country. (2) Pure source-based : only source country taxes. Rare. (3) Shared taxing rights : most income. Source country taxes at reduced rate + resident country taxes with FTCR. Common treaty mechanisms : Dividend withholding cap : typical 15% (many treaties) or 10% / 5% for substantial holdings. Interest withholding cap : often 0-10%. Royalty withholding cap : often 0-15%. Pension treatment : typically resident country only taxes private pensions; government pensions remain source-taxed. Capital gains : typically resident country only (except land in source country). Employment income : typically resident country only, unless work physically performed in source country. Residence tiebreaker (Article 4) : where individual qualifies as resident under both countries' domestic laws. Hierarchy: (a) permanent home; (b) centre of vital interests; (c) habitual abode; (d) nationality; (e) Mutual Agreement Procedure. Claiming treaty benefits : usually via withholding tax form (W-8BEN US, RFI France, etc.) + UK SA SA107 supplementary pages claiming treaty relief. Anti-treaty-shopping : Section 7 TIOPA 2010 + Multilateral Instrument 2017 (MLI) prevents abuse. Beneficial ownership + main purpose tests apply.

Q: How is foreign rental income taxed?

UK-resident landlord with foreign property : rental income subject to UK Income Tax under "overseas property business" rules. Statutory basis: Section 269 ITTOIA 2005 + foreign-property-specific provisions. Calculation : gross rental - allowable expenses - mortgage interest (post-Section 24 restriction for residential) = taxable profit. Same UK rules apply but on foreign property accounts. Mortgage interest restriction (Section 24) : applies to foreign residential rental same as UK. Mortgage interest = 20% basic-rate tax credit, not deduction. Higher-rate landlords with foreign mortgages disadvantaged. Foreign tax : foreign country typically also taxes rental at source. FTCR available against UK tax. Worked example - £30k French rental : French rental tax (rate ~30%): £9,000 paid. UK calculation: £30k × marginal rate (assume 40% higher-rate) = £12,000. FTCR = £9,000 (lesser of foreign tax / UK tax on same income). Net UK tax payable £3,000. Total UK + French = £12,000 (no double taxation). Capital allowances : foreign-property fixtures + furniture qualify for UK capital allowances (AIA, FE not applicable to property rental). Section 26 ITTOIA. Loss treatment : foreign rental losses carry forward against future foreign rental income only (Section 273 ITTOIA). Cannot offset against UK rental or other UK income (vs UK rental losses which offset other UK rental). Major restriction. Each country separately : French rental loss can't offset Spanish rental profit. Per-country streaming. SA reporting : foreign property income on SA106 (Foreign pages). Pre-fill won't include foreign property - taxpayer responsibility.

Q: How is foreign employment income taxed?

UK-resident employees with foreign employment : taxable in UK on arising basis. Section 6 + 14 ITEPA 2003. Where work physically performed : key issue for treaty interaction. Work performed in UK : UK tax applies regardless of employer location. Work performed overseas : most treaties allocate primary taxing rights to resident country (UK). Source country may tax depending on duration + thresholds. Short-term overseas assignments : typically continue under UK PAYE if employer is UK + assignment < 183 days. Detached duty relief : HMRC accepts overseas living expenses for genuine business travel (Section 339 ITEPA). Overseas Workdays Relief (OWR) : from April 2025, post-FIG reform restructured OWR. 4-year window + £300,000 cap or 30% of earnings (whichever lower). See FIG / OWR deep-dive . Designated qualifying accounts : amounts qualifying for OWR must be paid into a designated qualifying account (offshore bank account designated on SA). Funds remain UK-tax-free; transfers to non-qualifying accounts trigger immediate UK tax. Foreign tax on employment : many foreign countries tax employees physically working there. Treaty + FTCR mechanism prevents double taxation. National insurance + foreign social security : complex. UK + EEA had A1 certificate framework (continues post-Brexit for those covered by Withdrawal Agreement). Other countries: bilateral social security agreements. Reciprocal coverage avoids double NI + secures pension rights both jurisdictions. Modified PAYE (Section 690 ITEPA 2003) : special PAYE arrangements for internationally-mobile employees. Reduces over-deduction during overseas postings.

Q: How is foreign dividend income taxed?

UK-resident receiving foreign dividends : subject to UK Dividend Tax at standard rates 8.75% / 33.75% / 39.35% based on band + £500 dividend allowance. Statutory basis: Sections 384-401 ITTOIA 2005. FTCR available : foreign withholding tax credited against UK tax on same dividends. Treaty rate often reduces foreign WHT. Worked example - £10k US dividends (treaty rate 15% via W-8BEN) : US WHT: £1,500. UK basic-rate dividend tax: £500 allowance + £9,500 × 8.75% = £831. FTCR = lesser of £1,500 or £831 = £831. Net UK tax = £0. US WHT of £669 unrelieved (lost). Worked - higher-rate £10k dividends : US WHT £1,500. UK tax: £500 allowance + £9,500 × 33.75% = £3,206. FTCR = £1,500 (lesser). Net UK tax = £1,706. Total tax 32% combined. Dividend allowance £500 : shared across UK + foreign dividends. NOT per-source. SA reporting : foreign dividends on SA106 supplementary pages. List each dividend with payer, country, gross dividend, foreign tax paid, treaty rate claimed. Reclaiming over-withheld foreign tax : if foreign WHT exceeds treaty rate (failure to file W-8BEN), file refund claim with foreign tax authority. Limited time (typically 3-5 years). Excluded : dividends within UK pension wrapper, ISA wrapper = not subject to UK dividend tax. But foreign WHT may still apply (depending on treaty). US dividends in UK ISA still get 30% WHT (US treats UK ISA same as taxable). Recovering US WHT inside UK ISA : not possible. Cost of holding US shares directly. ETF / fund-of-funds may aggregate WHT better.

Q: What is the remittance basis vs FIG vs arising basis?

Three basis types over different time periods : Pre-April 2025 - Remittance Basis : non-UK-domiciled individuals could elect remittance basis. Foreign income/gains taxed only when remitted to UK. Remittance Basis Charge: £30k (after 7 of last 9 UK-resident) / £60k (12 of 14) / abolished if you were UK-resident 15 of 20 years (deemed-domicile). From April 2025 - FIG (Foreign Income and Gains) regime : replaced remittance basis. New UK arrivers (non-UK resident 10+ years pre-arrival) get 4-year exemption on ALL foreign income + gains. After 4 years: arising basis. Election cost: loss of Personal Allowance + CGT AEA for election year. See FIG deep-dive . Arising basis : standard treatment - worldwide income taxed when earned. Foreign Tax Credit Relief available. Who uses which : New arriver (post-April 2025) : FIG for first 4 years. Long-term UK resident (10+ years) : arising basis only. Pre-April 2025 remittance basis user : TRF (Temporary Repatriation Facility) 2025-2028 at 12-15% to remit pre-2025 funds. UK-domiciled born : always arising basis. Worked example - executive arriving April 2026 with £200k salary + £50k US dividends : Year 1 with FIG election : UK tax on £200k UK salary. Foreign £50k dividends EXEMPT under FIG. Tax saving £20k+ vs arising basis. Cost: lose PA £12,570 = £5k extra tax on salary. Net saving ~£15k. Year 5 (post-FIG window) : arising basis. Foreign £50k dividends taxed in UK with FTCR. No exemption. Critical decision : FIG election requires careful tax modelling especially for high earners.

Q: How is foreign capital gains tax treated?

UK-resident worldwide CGT scope : gains on foreign assets subject to UK CGT at 18% / 24% standard rates. Section 2 TCGA 1992. Foreign tax credit for CGT : foreign CGT paid creditable against UK CGT via FTCR mechanism. Section 18 TIOPA 2010. Worked example - £100k gain on US stock : US CGT 15-20% (long-term capital gains rate). UK CGT £100k × 24% higher-rate - £3k AEA = £23,280. US CGT paid: £15k. FTCR = £15k. Net UK tax: £8,280. Total tax £23,280 (no double). Currency exposure : gain calculated in GBP using HMRC rates at acquisition + disposal. Foreign currency gain/loss part of total UK gain. Treaty rules vary : most treaties give UK (resident country) primary CGT taxing rights. Source country generally retains rights on land + immovable property. UK land + property held by non-residents : separate NRCGT regime since 2015. NOT discussed here (different rules apply). FIG exemption : new arrivers under 4-year FIG window: foreign gains exempt from UK CGT during window. Section 87 TCGA 1992 - non-resident trusts : complex anti-avoidance. Settlor of non-resident trust may face UK CGT on trust gains via attribution rules. SA reporting : foreign capital gains on SA108 (with country + asset type + gain/loss + foreign tax paid). 30-day reporting (UK residential property only) : doesn't apply to foreign property - standard SA reporting timeframe (31 January following tax year). Crypto disposals on foreign exchanges : full UK CGT - HMRC asserts UK-resident has UK taxable position regardless of exchange location. CARF January 2026 will provide HMRC visibility into foreign crypto holdings.

Q: What about UK State Pension overseas or foreign pensions?

UK State Pension overseas : portable to most countries. Most treaties allow UK to continue taxing UK State Pension regardless of recipient's residence. Some countries (USA, Australia, etc.) also tax UK State Pension under their own rules - FTCR or treaty relief applies. UK State Pension frozen overseas : in countries NOT covered by reciprocal agreements (e.g., Australia, Canada, India, South Africa, NZ, Trinidad), UK State Pension frozen at rate at first qualifying year overseas. Not increased annually. Major issue for British retirees in these countries. Foreign pensions UK-taxable : UK-resident receiving foreign pension - typically taxable in UK at standard IT rates. Treaty special rules : Government / civil service pensions : usually taxed only by source country regardless of where recipient resides. Private pensions : usually taxed by residence country only. US Social Security : UK-US treaty allows both countries to tax. Complex computation. FTCR available. Foreign private pension lump sums : complex - often partly taxable in UK on remittance/arising basis depending on country rules. QROPS (Qualifying Recognised Overseas Pension Schemes) : UK pension transfers to QROPS abroad. Subject to 25% Overseas Transfer Charge unless specific exemptions (EEA + employer-sponsored + within EEA, etc.). Anti-avoidance + reporting requirements heavy. Foreign pension contributions while UK-resident : contributions to foreign pension may or may not qualify for UK tax relief. Most don't. Specific UK-registered overseas scheme may qualify. SA reporting : foreign pension income on SA106 (Foreign pages). Currency conversion + foreign tax paid documented.

Comprehensive UK tax on foreign income guide for 2026/27. UK-resident worldwide income scope under Section 6 ITA 2007. Foreign Tax Credit Relief (FTCR) Section 18 TIOPA 2010. Double tax treaty mechanics + 130+ UK treaties + Article 4 residence tiebreakers. Statutory Residence Test (Schedule 45 FA 2013) with 3-test structure + UK ties analysis. Foreign income types covered - employment, rental, dividend, interest, capital gains, pensions. FIG regime context (April 2025 reform) + 4-year exemption window. OWR Overseas Workdays Relief + £300k cap. QROPS pension transfers + 25% Overseas Transfer Charge. Crypto on foreign exchanges + CARF January 2026. State Pension overseas + frozen-pension countries. 12-FAQ. Statute - TIOPA 2010 Part 2, ITA 2007, ITTOIA 2005, TCGA 1992, ITEPA 2003.

Frequently asked questions

How is foreign income taxed for UK residents in 2026/27?

UK-resident individuals taxed on WORLDWIDE income on arising basis (when earned). Statutory basis: Section 6 ITA 2007 (UK residence) + various income source rules. Default position: foreign salary, rental, dividends, interest, business profits, capital gains all subject to UK Income Tax / CGT at marginal rates. Major exception - FIG regime: from 6 April 2025, new UK arrivers get 4-year FIG (Foreign Income and Gains) exemption. Foreign income/gains within window NOT taxed in UK. See FIG deep-dive guide. Foreign Tax Credit Relief (FTCR): tax paid in foreign country credited against UK tax on same income. Prevents double taxation. Statutory basis: Section 18 + Schedule 4 TIOPA 2010. Worked example - £80,000 UK salary + £20,000 US dividends: UK tax: total £100k income. £20k US dividends taxed at 33.75% (higher-rate) = £6,750 UK tax. US withholding tax: 15% (treaty rate with W-8BEN) = $3,000 = £2,250. FTCR credit: £2,250. Net UK tax on US dividends: £6,750 - £2,250 = £4,500. Reporting on Self Assessment: foreign income declared on SA106 (Foreign supplementary pages). Each income type with country + gross income + foreign tax paid. Currency conversion: use HMRC's average exchange rate for the year OR spot rate at receipt. Be consistent across year. Don't forget: even if no UK tax due (low income, full FTCR), still must report.

What is the Statutory Residence Test (SRT)?

SRT: statutory framework determining UK tax residence. Statutory basis: Schedule 45 Finance Act 2013. Three-test structure: (1) Automatic Overseas Test: if ANY applies = automatically non-UK resident. E.g., < 16 UK days in year, OR < 46 days + not been UK-resident in 3 prior years, OR full-time work overseas. (2) Automatic UK Test: if any applies = automatically UK resident. E.g., >= 183 days UK, OR only home in UK for 91+ days, OR full-time UK work. (3) Sufficient Ties Test: residual category. UK days + UK ties determine residence. UK ties: family tie (UK-resident spouse / partner / minor child), accommodation tie (UK accommodation available for 91 days + used at least once), work tie (40+ UK workdays), 90-day tie (90+ days UK in either of prior 2 years), country tie (UK days exceed any other country - applies only for "leavers"). Sufficient ties thresholds for arrivers (not UK-resident in any of prior 3 years): 183+ days = always resident. 121-182 days = resident if 1+ tie. 91-120 days = resident if 2+ ties. 46-90 days = resident if 3+ ties. 16-45 days = resident if 4+ ties. For leavers (UK-resident in any of prior 3 years): lower thresholds + country tie. Split year treatment: arrival or departure year can be split into UK-resident + non-resident portions. 8 cases for split-year treatment in HMRC RDR3 manual.

How does Foreign Tax Credit Relief (FTCR) work?

FTCR: relief preventing double taxation when same income taxed in foreign + UK. Statutory basis: Section 18 + 26-30 + Schedule 4 TIOPA 2010. Mechanics: Step 1: foreign income subject to foreign tax (withholding, foreign assessment). Step 2: UK calculates tax on the foreign income at UK rates. Step 3: lesser of (foreign tax paid) or (UK tax on same income) = FTCR credit. Worked example - £20k US dividends, 15% US WHT: foreign tax £3,000. UK tax on £20k dividend at higher-rate 33.75% = £6,750. FTCR = lesser of £3,000 or £6,750 = £3,000. Net UK tax payable on dividends: £6,750 - £3,000 = £3,750. Worked - foreign tax exceeds UK tax: £10k French dividends, 25% French tax = £2,500. UK tax £10k × 33.75% = £3,375. FTCR = £2,500 (lesser of). Net UK tax £875. Worked - excess foreign tax: £5k Belgian dividends, 30% withholding = £1,500. UK basic-rate dividend tax = £5k × 8.75% = £437. FTCR capped at £437. £1,063 of foreign tax UNRELIEVED + LOST. Cannot offset against other UK income: excess foreign tax doesn't reduce UK tax on UK-source income. Treaty rates: often lower than statutory foreign rates if claimed via W-8BEN (US), CERFA forms (France) etc. Claiming treaty rate at source maximises FTCR efficiency. Mixed income types: separate FTCR computation per income source + per country. Cannot pool foreign taxes across countries.

How do double tax treaties work?

UK has 130+ bilateral double tax treaties with countries. Allocate taxing rights between countries to prevent double taxation. Statutory basis: Sections 2-17 TIOPA 2010 + individual treaty texts. How treaties allocate taxing rights: (1) Pure residence-based: only resident country taxes. E.g., business profits without permanent establishment in source country. (2) Pure source-based: only source country taxes. Rare. (3) Shared taxing rights: most income. Source country taxes at reduced rate + resident country taxes with FTCR. Common treaty mechanisms: Dividend withholding cap: typical 15% (many treaties) or 10% / 5% for substantial holdings. Interest withholding cap: often 0-10%. Royalty withholding cap: often 0-15%. Pension treatment: typically resident country only taxes private pensions; government pensions remain source-taxed. Capital gains: typically resident country only (except land in source country). Employment income: typically resident country only, unless work physically performed in source country. Residence tiebreaker (Article 4): where individual qualifies as resident under both countries' domestic laws. Hierarchy: (a) permanent home; (b) centre of vital interests; (c) habitual abode; (d) nationality; (e) Mutual Agreement Procedure. Claiming treaty benefits: usually via withholding tax form (W-8BEN US, RFI France, etc.) + UK SA SA107 supplementary pages claiming treaty relief. Anti-treaty-shopping: Section 7 TIOPA 2010 + Multilateral Instrument 2017 (MLI) prevents abuse. Beneficial ownership + main purpose tests apply.

How is foreign rental income taxed?

UK-resident landlord with foreign property: rental income subject to UK Income Tax under "overseas property business" rules. Statutory basis: Section 269 ITTOIA 2005 + foreign-property-specific provisions. Calculation: gross rental - allowable expenses - mortgage interest (post-Section 24 restriction for residential) = taxable profit. Same UK rules apply but on foreign property accounts. Mortgage interest restriction (Section 24): applies to foreign residential rental same as UK. Mortgage interest = 20% basic-rate tax credit, not deduction. Higher-rate landlords with foreign mortgages disadvantaged. Foreign tax: foreign country typically also taxes rental at source. FTCR available against UK tax. Worked example - £30k French rental: French rental tax (rate ~30%): £9,000 paid. UK calculation: £30k × marginal rate (assume 40% higher-rate) = £12,000. FTCR = £9,000 (lesser of foreign tax / UK tax on same income). Net UK tax payable £3,000. Total UK + French = £12,000 (no double taxation). Capital allowances: foreign-property fixtures + furniture qualify for UK capital allowances (AIA, FE not applicable to property rental). Section 26 ITTOIA. Loss treatment: foreign rental losses carry forward against future foreign rental income only (Section 273 ITTOIA). Cannot offset against UK rental or other UK income (vs UK rental losses which offset other UK rental). Major restriction. Each country separately: French rental loss can't offset Spanish rental profit. Per-country streaming. SA reporting: foreign property income on SA106 (Foreign pages). Pre-fill won't include foreign property - taxpayer responsibility.

How is foreign employment income taxed?

UK-resident employees with foreign employment: taxable in UK on arising basis. Section 6 + 14 ITEPA 2003. Where work physically performed: key issue for treaty interaction. Work performed in UK: UK tax applies regardless of employer location. Work performed overseas: most treaties allocate primary taxing rights to resident country (UK). Source country may tax depending on duration + thresholds. Short-term overseas assignments: typically continue under UK PAYE if employer is UK + assignment < 183 days. Detached duty relief: HMRC accepts overseas living expenses for genuine business travel (Section 339 ITEPA). Overseas Workdays Relief (OWR): from April 2025, post-FIG reform restructured OWR. 4-year window + £300,000 cap or 30% of earnings (whichever lower). See FIG / OWR deep-dive. Designated qualifying accounts: amounts qualifying for OWR must be paid into a designated qualifying account (offshore bank account designated on SA). Funds remain UK-tax-free; transfers to non-qualifying accounts trigger immediate UK tax. Foreign tax on employment: many foreign countries tax employees physically working there. Treaty + FTCR mechanism prevents double taxation. National insurance + foreign social security: complex. UK + EEA had A1 certificate framework (continues post-Brexit for those covered by Withdrawal Agreement). Other countries: bilateral social security agreements. Reciprocal coverage avoids double NI + secures pension rights both jurisdictions. Modified PAYE (Section 690 ITEPA 2003): special PAYE arrangements for internationally-mobile employees. Reduces over-deduction during overseas postings.

How is foreign dividend income taxed?

UK-resident receiving foreign dividends: subject to UK Dividend Tax at standard rates 8.75% / 33.75% / 39.35% based on band + £500 dividend allowance. Statutory basis: Sections 384-401 ITTOIA 2005. FTCR available: foreign withholding tax credited against UK tax on same dividends. Treaty rate often reduces foreign WHT. Worked example - £10k US dividends (treaty rate 15% via W-8BEN): US WHT: £1,500. UK basic-rate dividend tax: £500 allowance + £9,500 × 8.75% = £831. FTCR = lesser of £1,500 or £831 = £831. Net UK tax = £0. US WHT of £669 unrelieved (lost). Worked - higher-rate £10k dividends: US WHT £1,500. UK tax: £500 allowance + £9,500 × 33.75% = £3,206. FTCR = £1,500 (lesser). Net UK tax = £1,706. Total tax 32% combined. Dividend allowance £500: shared across UK + foreign dividends. NOT per-source. SA reporting: foreign dividends on SA106 supplementary pages. List each dividend with payer, country, gross dividend, foreign tax paid, treaty rate claimed. Reclaiming over-withheld foreign tax: if foreign WHT exceeds treaty rate (failure to file W-8BEN), file refund claim with foreign tax authority. Limited time (typically 3-5 years). Excluded: dividends within UK pension wrapper, ISA wrapper = not subject to UK dividend tax. But foreign WHT may still apply (depending on treaty). US dividends in UK ISA still get 30% WHT (US treats UK ISA same as taxable). Recovering US WHT inside UK ISA: not possible. Cost of holding US shares directly. ETF / fund-of-funds may aggregate WHT better.

What is the remittance basis vs FIG vs arising basis?

Three basis types over different time periods: Pre-April 2025 - Remittance Basis: non-UK-domiciled individuals could elect remittance basis. Foreign income/gains taxed only when remitted to UK. Remittance Basis Charge: £30k (after 7 of last 9 UK-resident) / £60k (12 of 14) / abolished if you were UK-resident 15 of 20 years (deemed-domicile). From April 2025 - FIG (Foreign Income and Gains) regime: replaced remittance basis. New UK arrivers (non-UK resident 10+ years pre-arrival) get 4-year exemption on ALL foreign income + gains. After 4 years: arising basis. Election cost: loss of Personal Allowance + CGT AEA for election year. See FIG deep-dive. Arising basis: standard treatment - worldwide income taxed when earned. Foreign Tax Credit Relief available. Who uses which: New arriver (post-April 2025): FIG for first 4 years. Long-term UK resident (10+ years): arising basis only. Pre-April 2025 remittance basis user: TRF (Temporary Repatriation Facility) 2025-2028 at 12-15% to remit pre-2025 funds. UK-domiciled born: always arising basis. Worked example - executive arriving April 2026 with £200k salary + £50k US dividends: Year 1 with FIG election: UK tax on £200k UK salary. Foreign £50k dividends EXEMPT under FIG. Tax saving £20k+ vs arising basis. Cost: lose PA £12,570 = £5k extra tax on salary. Net saving ~£15k. Year 5 (post-FIG window): arising basis. Foreign £50k dividends taxed in UK with FTCR. No exemption. Critical decision: FIG election requires careful tax modelling especially for high earners.

How is foreign capital gains tax treated?

UK-resident worldwide CGT scope: gains on foreign assets subject to UK CGT at 18% / 24% standard rates. Section 2 TCGA 1992. Foreign tax credit for CGT: foreign CGT paid creditable against UK CGT via FTCR mechanism. Section 18 TIOPA 2010. Worked example - £100k gain on US stock: US CGT 15-20% (long-term capital gains rate). UK CGT £100k × 24% higher-rate - £3k AEA = £23,280. US CGT paid: £15k. FTCR = £15k. Net UK tax: £8,280. Total tax £23,280 (no double). Currency exposure: gain calculated in GBP using HMRC rates at acquisition + disposal. Foreign currency gain/loss part of total UK gain. Treaty rules vary: most treaties give UK (resident country) primary CGT taxing rights. Source country generally retains rights on land + immovable property. UK land + property held by non-residents: separate NRCGT regime since 2015. NOT discussed here (different rules apply). FIG exemption: new arrivers under 4-year FIG window: foreign gains exempt from UK CGT during window. Section 87 TCGA 1992 - non-resident trusts: complex anti-avoidance. Settlor of non-resident trust may face UK CGT on trust gains via attribution rules. SA reporting: foreign capital gains on SA108 (with country + asset type + gain/loss + foreign tax paid). 30-day reporting (UK residential property only): doesn't apply to foreign property - standard SA reporting timeframe (31 January following tax year). Crypto disposals on foreign exchanges: full UK CGT - HMRC asserts UK-resident has UK taxable position regardless of exchange location. CARF January 2026 will provide HMRC visibility into foreign crypto holdings.

What about UK State Pension overseas or foreign pensions?

UK State Pension overseas: portable to most countries. Most treaties allow UK to continue taxing UK State Pension regardless of recipient's residence. Some countries (USA, Australia, etc.) also tax UK State Pension under their own rules - FTCR or treaty relief applies. UK State Pension frozen overseas: in countries NOT covered by reciprocal agreements (e.g., Australia, Canada, India, South Africa, NZ, Trinidad), UK State Pension frozen at rate at first qualifying year overseas. Not increased annually. Major issue for British retirees in these countries. Foreign pensions UK-taxable: UK-resident receiving foreign pension - typically taxable in UK at standard IT rates. Treaty special rules: Government / civil service pensions: usually taxed only by source country regardless of where recipient resides. Private pensions: usually taxed by residence country only. US Social Security: UK-US treaty allows both countries to tax. Complex computation. FTCR available. Foreign private pension lump sums: complex - often partly taxable in UK on remittance/arising basis depending on country rules. QROPS (Qualifying Recognised Overseas Pension Schemes): UK pension transfers to QROPS abroad. Subject to 25% Overseas Transfer Charge unless specific exemptions (EEA + employer-sponsored + within EEA, etc.). Anti-avoidance + reporting requirements heavy. Foreign pension contributions while UK-resident: contributions to foreign pension may or may not qualify for UK tax relief. Most don't. Specific UK-registered overseas scheme may qualify. SA reporting: foreign pension income on SA106 (Foreign pages). Currency conversion + foreign tax paid documented.

How does crypto on foreign exchanges interact with UK tax?

UK-resident crypto disposals on FOREIGN exchanges: full UK CGT scope. Statutory basis: Section 2 + 13A TCGA 1992 + HMRC Cryptoassets Manual. Disposal location IRRELEVANT: HMRC asserts UK-resident's worldwide crypto disposals subject to UK CGT. Foreign exchange data sharing: CRS (Common Reporting Standard): 100+ countries since 2017. Many crypto exchanges report user holdings + activity. CARF (Crypto-Asset Reporting Framework): January 2026 - 60+ countries automatically exchange crypto transaction data. HMRC will have detailed visibility into UK residents' crypto on foreign exchanges. HMRC enforcement: nudge letters increasingly targeting foreign crypto exchange holdings. Schedule 24A FA 2010 offshore penalty regime applies (up to 200% for Category 3 offshore non-transparent jurisdictions). FIG exemption: new arrivers (post-April 2025) may exempt foreign-exchange crypto gains during 4-year FIG window if elected. Major planning opportunity for new arrivers with significant pre-arrival crypto holdings. Foreign withholding tax: some countries withhold tax on crypto disposals (uncommon but emerging - Spain, Portugal pioneered). FTCR available. Currency conversion: UK CGT calculated in GBP using HMRC rates at acquisition + disposal. Multi-currency crypto trades require careful records. Section 104 pool + share-matching: applies to crypto regardless of exchange location. Aggregate UK + foreign exchange holdings of same crypto in single Section 104 pool. Detailed records essential: foreign exchange CSVs + transaction logs + USD/EUR/GBP rate at each transaction. Crypto tax software (Koinly, CoinLedger) handles foreign exchange data import + UK CGT calculation. See UK crypto tax deep-dive.

What records + reporting are required for foreign income?

Comprehensive records for foreign income required under Section 12B TMA 1970 + 6-year retention. Per income source / per country: (1) Income statements: foreign employer payslips, dividend confirmations, rental statements, interest statements. (2) Foreign tax paid evidence: foreign tax certificates, withholding tax statements, foreign tax return copies. (3) Currency conversion records: HMRC rates used + spot rates if applied. Consistency across year. (4) Treaty form copies: W-8BEN, RFI France, CERFA, country-specific treaty claim forms. (5) Bank statements: foreign bank accounts + transfers to UK. (6) Property records (rental): tenancy agreements, mortgage statements, maintenance receipts. (7) Capital gains records: acquisition cost + date + improvements + disposal proceeds + foreign tax. SA reporting: SA106 (Foreign): most foreign income types. Per country + per income type. SA107 (Trust + Estate): foreign trust beneficiary income. SA108 (Capital Gains): foreign capital gains. SA110 (Residence/Remittance/FIG): residence status + FIG election if applicable. Filing deadline: 31 January online (31 October paper). HMRC enforcement: foreign income increasingly visible via CRS / CARF / treaty data sharing. Schedule 24A FA 2010 offshore penalties severe (up to 200%). Voluntary disclosure via Worldwide Disclosure Facility (WDF) provides better penalty terms than HMRC discovery. Specialist advice essential: foreign income tax planning + compliance is complex. Cross-border CTA-qualified tax adviser recommended for £20k+ foreign income.