Quick answer
UK residents are generally taxed on worldwide income, so foreign pensions, rental income, interest and dividends must be reported on the foreign pages (SA106) of your Self Assessment return. You can claim relief for foreign tax already paid.
Updated October 2026 · Figures based on 2026/27 rates
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What counts as foreign income
Overseas employment income, foreign property rent, interest from foreign banks, dividends from overseas companies and foreign pensions.
Double taxation relief
You can claim a foreign tax credit relief for tax paid abroad, limited to the UK tax due on the same income, and double taxation treaties can reduce the bill.
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New residence-based rules
From April 2025 the remittance basis was replaced by a residence-based regime, including a four-year foreign income and gains relief for qualifying new arrivals.
Records
Keep statements, foreign tax certificates and exchange rate information in pounds for each source of income.
Who pays UK tax on foreign income
If you are resident in the UK for tax purposes, you are generally taxed on your worldwide income as it arises, whether or not you bring the money to the UK. That includes overseas employment pay, foreign pensions, interest, dividends, rental profits from property abroad, and profits from a business carried on overseas. Residence is decided under the Statutory Residence Test, which looks at the days you spend in the UK, your ties here and your work pattern, rather than simply your nationality.
The rules changed on 6 April 2025. The old remittance basis for non-UK domiciled individuals was replaced by a residence-based system. Qualifying new arrivals to the UK may be able to use a four-year foreign income and gains (FIG) exemption, after a period of non-residence. Details and conditions apply, so check current HMRC guidance. For background, see what changed when the non-dom regime ended and the FIG regime for UK arrivals.
Reporting foreign income on Self Assessment
Foreign income is reported on the foreign pages of the return, alongside your UK income. You usually need to convert amounts into pounds sterling using a reasonable exchange rate, applied consistently, and keep a note of the rate you used. If you have foreign income and you are not already in Self Assessment, you will normally need to register by 5 October after the end of the tax year in which the income arose. Keep evidence of the income and any foreign tax paid, such as statements, tax certificates and bank records.
Foreign tax credit relief
Where the same income has been taxed abroad and in the UK, relief is usually available so you do not pay twice. The credit is normally limited to the lower of the foreign tax actually paid and the UK tax due on that income. A double taxation agreement between the UK and the other country may also set limits on what the foreign country can withhold. Our guide to double taxation relief explains how this works in practice.
Worked example: foreign dividends
This is an illustrative example using 2026/27 rates. A UK-resident employee earning £30,000 receives £2,000 of dividends from an overseas company. The foreign country withheld 15% tax, or £300.
| Step | Working | Result |
|---|---|---|
| Dividend allowance | First £500 at 0% | £0 |
| Dividends taxed in UK | £2,000 – £500 = £1,500 x 8.75% | £131.25 |
| Foreign tax paid | £2,000 x 15% | £300 |
| Credit allowed | Lower of £300 and £131.25 | £131.25 |
| UK tax payable | £131.25 – £131.25 | £0 |
The extra £168.75 of foreign tax cannot normally be used against other UK tax. Depending on the treaty, part of the foreign withholding may be reclaimable from the foreign tax authority, so it is worth checking. From April 2026, basic-rate dividend tax rises to 10.75%, which would increase the UK tax on this example to £161.25 before credit, still below the £300 foreign tax paid.
Other types of foreign income
- Foreign rental income: taxed on the profit, with similar rules to UK lettings, though the property income allowance and some reliefs work differently. See tax on foreign rental income for UK residents.
- Overseas employment: may be taxed in both countries, so credit relief is important. See working abroad and UK tax.
- Foreign pensions and interest: usually reportable even if little or no tax was withheld.
Common mistakes
- Assuming foreign income need not be reported because the money stayed overseas.
- Forgetting to convert amounts to sterling or keeping no record of the exchange rate used.
- Claiming more foreign tax credit than the UK tax due on that income.
- Not keeping foreign tax certificates or statements.
- Missing the 5 October registration deadline.
- Assuming old non-dom treatment still applies after 6 April 2025.
Practical checklist
- List every source of income outside the UK.
- Confirm your residence status for the tax year.
- Collect statements and certificates showing the income and any foreign tax paid.
- Convert amounts to sterling and note the exchange rate used.
- Check for relevant treaty or credit relief.
- File online and pay by 31 January.
How SATR can help
SATR, a trading style of Accotax, has qualified UK accountants who prepare returns with foreign income and file them online for a fixed fee from £199 + VAT. See foreign income Self Assessment or order online.
This article is general information, not personal tax advice.
Frequently asked questions
Do I report foreign income if it was taxed overseas?
Yes. It is still reported in the UK, with a credit available for the foreign tax.
Which exchange rate should I use?
Use a reasonable published average or the rate on the date of the transaction and apply it consistently.
Do I pay UK tax on foreign income if I do not bring the money to the UK?
If you are UK resident, you are generally taxable on worldwide income as it arises, whether or not you remit it. The rules for new arrivals changed on 6 April 2025, so check current HMRC guidance.
How do I avoid paying tax twice on the same income?
Foreign tax credit relief, and any applicable double taxation agreement, normally limits the double charge. The credit is usually capped at the UK tax on that income.
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The bottom line
UK residents are taxed on worldwide income as it arises, so every foreign source — employment, pensions, dividends, interest and rental profits — must be converted to sterling and reported on the SA106 foreign pages of your Self Assessment return. Claim foreign tax credit relief so the same income is not taxed twice, and check the FIG regime if you are a qualifying new arrival.
Want it handled for you? Our qualified UK accountants prepare and file Self Assessment returns with foreign income for a fixed fee from £199 + VAT. Order online or get an instant quote today.
