Do I Need to File a UK Tax Return If I Have Foreign Income?

Introduction

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If you're living in the UK and receiving foreign income — whether from interest, rental properties, or dividends — it’s natural to wonder: Do I need to tell HMRC?


The short answer is: yes you do. With the UK's evolving tax rules around offshore income, especially under the Foreign Income and Gains (FIG) regime, foreign income must be declared — even if it's modest or taxed abroad.


In this blog post, we explain when a UK tax return is required for foreign income, the treatment of interest, rental income, and dividends, and the limited options available for exemptions or relief. We'll also address the abolition of the £2,000 remittance basis de minimis and what it means for existing or returning UK residents.

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🌐 Foreign Income: What Counts?

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Foreign income refers to any income arising outside the UK. This includes:


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• Interest from overseas bank accounts or bonds
• Rental income from property located abroad
• Dividends from foreign companies or investment funds


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If you are UK tax resident, as a starting point, your worldwide income is taxable unless your claim the FIG scheme.

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✅ Filing Requirement: Do You Need to Submit a Tax Return?

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If you have foreign income — yes, you need to submit a tax return. Even if the foreign income is a trivial amount, you must file a Self Assessment Tax Return. The options available to you are as follows:


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• Declare foreign income to HMRC and claim available reliefs to mitigate double tax if the income is taxed in the source country; or
• Elect for the FIG scheme if you qualify to exempt foreign income from taxation.


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Failing to report foreign income can result in interest, penalties, and scrutiny from HMRC — especially with increased international data-sharing under the Common Reporting Standard (CRS).

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🚫 What Changed: Goodbye £2,000 De Minimis

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Under the old remittance basis system, foreign income under £2,000 didn’t need to be reported if it wasn’t brought into the UK. However, from April 2025, the remittance basis is being abolished and replaced by the Foreign Income and Gains (FIG) scheme for qualifying individuals.


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This change significantly affects existing non-doms and foreign nationals who previously relied on the £2,000 threshold to avoid filing.

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📣 Option 1: Claim FIG

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The Foreign Income and Gains (FIG) regime applies from the 2025/26 tax year, offering an exemption from UK tax on foreign income and gains.


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To qualify, you must:


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1. Be UK resident
2. Have been non-resident for UK tax purposes for at least 10 consecutive tax years
3. Be within your first four tax years of UK residence 


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If you meet these criteria, you can:


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• Claim the FIG exemption on your Self Assessment tax return
• Avoid UK tax on foreign interest, dividends, rental income, and capital gains
• Freely remit foreign income to the UK without additional UK tax


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Important: The FIG exemption is not automatic. You must claim it each year through Self Assessment.

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🌐 Option 2: Declare Foreign Income and Claim Foreign Tax Credit Relief

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If you don’t qualify for the FIG exemption — or choose not to use it — you must declare your foreign income in full. However, you may be able to reduce or eliminate double taxation using Foreign Tax Credit Relief (FTCR).


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How It Works:


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1. You report your gross foreign income (before foreign taxes) to HMRC
2. You report the foreign tax paid on that income
3. HMRC gives a credit up to the amount of UK tax due on the same income


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FTCR is available for most countries that have a double taxation agreement (DTA) with the UK.

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📆  Key Deadlines & Practical Advice

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🔸 6 April – 5 April: UK tax year

🔸 31 October: Paper tax return deadline

🔸 31 January: Online tax return deadline and payment due date


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If you’re claiming FIG, it’s best to file early to ensure claims are properly documented.

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🔍 How Global Tax Consulting Can Help

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At Global Tax Consulting, we specialise in helping UK residents — including foreign nationals and returning expats — navigate foreign income reporting and optimise tax outcomes.


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We’ll help you:


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• Determine your FIG eligibility
• Prepare and submit your Self Assessment tax return
• Accurately calculate and claim Foreign Tax Credit Relief
• Stay compliant with evolving HMRC requirements