How to Declare Foreign Income and Gains to HMRC

If you live in the UK and have money coming in from abroad, you may be asking yourself simple but important questions. Do I have to tell HMRC about it? How do I show it on my tax return? Will I be taxed twice, once overseas and again in the UK?

From 6 April 2025 the old remittance basis for non-UK domiciled individuals was abolished and replaced by a residence based Foreign Income and Gains regime (FIG) regime. That affects not only how new foreign income is taxed but also how older unremitted income is dealt with.

This article explains, what HMRC treats as foreign income, when you must tell HMRC about it, how the FIG regime fits in, how to report everything through Self-Assessment and how to avoid double taxation when another country has already taken its share.

What HMRC Treats as Foreign Income and Gains?

For UK tax, foreign income or gains means any money that comes from outside England, Scotland, Wales and Northern Ireland. This can include rent from an overseas property, interest on a foreign bank account, dividends from non-UK companies, gains when you sell foreign investments, etc.

The source of the income is what matters, not the currency. Interest in sterling from a bank in France is foreign income. Interest in euros from a bank in London is UK income.

When You Need to Tell HMRC?

Everything starts with one question: are you UK resident for the tax year? UK tax residency is determined by Statutory Residency Test (SRT).

If you are non-resident, you are normally only taxed on UK income and do not have to declare foreign income to HMRC. If you are UK resident, the default rule is that all your worldwide income and gains are within the UK tax unless a specific relief applies.

But what if you arrive or leave part way through the year? You may qualify for split year treatment, which means only the UK part of the year is taxable on worldwide income. For example, an employee who moves from Germany to the UK on 1 September 2025 and meets the split year conditions would be taxable on worldwide income only from that date. German salary earned before arrival stays outside the UK net for that year.

From 6 April 2025, once you are UK resident, the position is clear. All foreign income is reportable and taxable in the UK as it arises, unless you qualify for reliefs.

How to Report to HMRC?

Foreign income must be declared in the foreign income section of your Self-Assessment tax return via supplementary pages SA 106.

Register for Self-Assessment if you are not already in it

If foreign income means you need to complete a Self-Assessment return for the first time, you must register with HMRC by 5 October following the end of the tax year. You can register online. HMRC will then issue a Unique Taxpayer Reference (UTR). Once you have a UTR you can submit your return, usually through commercial software or HMRC’s online service.

If you are already in Self-Assessment, you simply include the foreign income in your next return. You do not need to register again.

Gather figures and convert them to sterling

Before you start filling in forms, it is worth pulling together a clean set of figures. For each source of foreign income, you should have:

All amounts on the UK return must be in sterling.

Understand which forms and pages you need

The main form is SA100. To declare foreign income, you usually need the SA106 Foreign pages as well. If you file online, SA106 is integrated into the digital return. If you file on paper, you download SA106 and attach it to SA100.

Most foreign income is shown on the SA106 Foreign pages. Foreign interest, overseas dividends and foreign pensions are entered in the savings and investment sections of SA106. Income from letting out overseas property is entered in the foreign property section.

Employment income is recorded on SA102 and self-employment on SA103, but you still make any double tax relief claim for these sources on SA106.

The deadline for filing an online return and paying the tax due is 31 January following the end of the tax year.

The Foreign Income and Gains Regime in Practice

The FIG regime is a new, time limited relief for certain new UK residents. It has replaced the old remittance basis for foreign income and gains from 2025 to 2026 onwards. Domicile status is no longer relevant for income tax and capital gains tax, and the focus is now entirely on residence history.

You can claim FIG if both of the following apply:

If you qualify, the regime is available for your first four tax years of UK residence. Where you became UK resident shortly before April 2025 you can still use the regime for any remaining years of that four-year period that fall after 5 April 2025.When you claim FIG, qualifying foreign income and gains are effectively left out of the UK tax calculation for that year.

The relief however is not automatic. You must claim it each year on your Self-Assessment return.

Sounds too good, right? Well, it is but the catch here is that individuals choosing to be taxed under the 4-year FIG regime will lose Personal Allowance entitlement and the Capital Gains Tax (CGT) annual exempt amount for those years.

Avoiding Double Taxation

People are often worried that the same income will be taxed once overseas and then fully taxed again in the UK. Fortunately, the UK has established methods to prevent this.

The main relief is Foreign Tax Credit Relief. Where the same income is taxed both abroad and, in the UK, you can claim a credit against your UK liability. The amount is limited to the lower of the foreign tax actually paid and the UK tax due on that income. In simple terms, HMRC asks you to calculate your total UK tax bill including the foreign income and then to recalculate it as if that income did not exist. The difference between the two is the maximum credit. The claim is made on the SA106 pages, where you show the gross foreign income and the foreign tax deducted.

On top of that, the UK has double taxation agreements with many countries. These treaties decide which country has first taxing rights over particular types of income and often cap the rate of withholding tax that the source country can charge.

Dealing with Earlier Years

If you realise that you should have been declaring foreign income in earlier years, it is usually better to approach HMRC before they contact you. The Worldwide Disclosure Facility is the standard route for putting right past offshore issues.

An unprompted disclosure, where HMRC has not yet opened an enquiry or sent a targeted letter, generally results in lower penalties than a prompted one. Penalty ranges depend on whether the behaviour was careless, deliberate or deliberate and concealed, but coming forward voluntarily tends to reduce the percentage significantly.

Practical points that matter

You must convert all foreign figures into sterling. You can use HMRC monthly or annual average rates, or any other reputable source, as long as you apply your method consistently and the result is reasonable.

Keep solid evidence for at least five years after the filing deadline. That means bank and broker statements, rental accounts, foreign tax certificates and a note of the exchange rates you used, so you can support your Self-Assessment if HMRC asks.

Remember that most other countries use different tax years, often January to December, while the UK uses 6 April to 5 April. You cannot just copy a calendar year total onto your return. You need to split each foreign statement so that every item of income falls into the correct UK tax year based on the actual payment date.

Conclusion

UK residents must report foreign income to HMRC, whether it is overseas rent, dividends, pensions or investment gains. In most cases the process is straightforward: confirm your residence, identify the income, consider whether FIG applies, convert amounts to sterling, claim double tax relief where relevant, and report it on SA106 with your return.

The difficulty is often in the detail, particularly for employment sourcing, treaty positions and whether a FIG claim is worthwhile in your circumstances. If you are unsure, or need to correct earlier years, UK Property Accountants can help with SA106 filings, FIG assessments, double tax relief calculations and Worldwide Disclosure Facility from start to finish, including reviewing past years, quantifying any liabilities, preparing the disclosure narrative and liaising with HMRC.