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Working Abroad and Foreign Earnings

Earnings originating from outside of the UK may need to be declared on a UK self-assessment personal tax return.

This will depend on a multitude of factors, such as:

• Country of tax residency and domicile

• Country where the earnings are generated

• Type of earnings

• Individual agreement between that country and the UK, known as the double-taxation agreement.

Tax residency

UK residence status affects whether tax is required to be paid in the UK on foreign income. Residents normally pay tax on worldwide income – subject to the above factors – whereas non-residents only pay tax on their UK income.

Tax residency is therefore important to determine before attempting to complete a personal tax return.

Income types

The types of foreign income that may need to be declared include, but are not limited to;

• Wages when working abroad

• Foreign investment income such as dividends

• Rental income from overseas property

• Income from pensions held overseas

Dual taxation

It may be the case that foreign income is taxed both in the UK, and in the country in which the income is generated. In such cases, tax relief can usually be claimed to get some or all of this back. How a claim is carried out depends on whether the foreign income has already been taxed.

Due to the level of complexity involved with certain types of foreign earnings it is crucial to seek professional advice to ensure compliance both in the UK and in the country in which those earnings have been generated.

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