Q: Should I be declaring my foreign income on my UK Self-Assessment tax return?

A: In short, the answer is nearly always yes! If you are resident and/or domiciled in the UK for tax purposes, you are taxable here on your worldwide income.

When preparing and submitting your UK tax return, you should generally include any overseas income on the foreign pages. If you are completing and submitting your tax return on paper and working towards the 31 October filing deadline, you will normally need to specifically request these pages from HMRC.

Overseas income (including interest, dividends, rental income, state pensions and personal pensions etc.) may also be taxable in the country of origin even if you are not resident there. You may therefore have had tax withheld prior to income being paid to you, or have a tax return filing requirement in the source location.

In order to ensure that you are not doubly taxed (i.e. fully taxed on all income in both locations), the UK has signed double taxation agreements (DTAs) with most countries and these should be referred to when determining which location has the primary taxing right over an income source. 

Whilst some DTAs have been in existence for over 50 years and are worded in a fairly impenetrable manner, all will clearly list out each income source and the tax treatment accorded to it under the DTA in the situation where both countries would ordinarily charge tax under its own domestic legislation.

The idea of the DTA is that it sits ‘above’ the domestic legislation and makes a decision in the case of conflicting domestic rules potentially leading to double taxation. 

It is worth noting that not all treaties are the same, even in European locations – for example, a French state pension paid to a UK tax resident will not be treated the same under the UK/France DTA as a German paid state pension will be under the UK/Germany DTA.

Of course, the starting point for deciding if your foreign income is taxable here is to determine whether you are UK tax resident and/or domiciled in the UK for tax purposes in the first place. In the majority of cases this will be clear. However, if you are unsure of your UK tax residency status and would like to consider this further, please feel free to pop into our offices to arrange a free initial consultation with one of the personal tax team and we will be happy to discuss this with you.