UK Tax on Foreign Income 2026 -- Residency, Remittance and Treaty Relief

Last reviewed: 26 April 2026

UK tax on foreign income is determined primarily by UK tax residency: UK residents are taxed on their worldwide income and gains; non-UK-residents are generally taxed only on UK-source income (employment income for UK duties, rental income from UK property, UK pensions, UK dividends). The legal framework for UK tax on foreign income changed significantly in 2025: the Finance Act 2025 abolished the non-domicile status that had previously allowed UK-resident non-doms to shelter unremitted foreign income from UK tax via the remittance basis, replacing it with the 4-year Foreign Income and Gains (FIG) regime for new UK arrivals. For the SRT framework that determines UK tax residency, see our UK tax residency guide. For the investment and portfolio implications of UK tax on foreign income, see our UK expat investments guide.

The UK tax on foreign income question has three distinct contexts: (1) UK residents who receive foreign income (employment abroad, overseas rental, foreign dividends) -- these are fully UK-taxable at standard rates; (2) non-UK-residents who have UK-source income (UK rental, UK pension, UK employment for UK duties) -- only the UK-source income is UK-taxable, at the applicable non-resident rates; and (3) the transitional regime for former non-doms who were UK resident and previously sheltered foreign income under the remittance basis -- these individuals must now assess their position under the Finance Act 2025 rules. HMRC’s guidance on tax on foreign income is at gov.uk/tax-foreign-income/residence; the HMRC Statutory Residence Test guidance (gov.uk/guidance/the-statutory-residence-test-srt) is the primary reference for determining UK tax residency.

The Statutory Residence Test and UK tax on foreign income

The Statutory Residence Test (SRT, Finance Act 2013, HMRC guidance at gov.uk/guidance/the-statutory-residence-test-srt) determines UK tax residency on an annual basis. Until non-UK-residency is established under the SRT, all worldwide income remains UK-taxable regardless of where it is earned or remitted. Key SRT rules for departing UK nationals: the automatic overseas tests (fewer than 16 UK days per year for those recently UK-resident; fewer than 46 days for those not recently UK-resident; or the full-time working abroad test of 35+ hours per week with fewer than 91 UK days and 30 UK workdays) must be met to establish non-UK-residency for a full tax year. In the departure year, split-year treatment (FA 2013 schedules, HMRC guidance at gov.uk/guidance/the-statutory-residence-test-srt) allows the year to be split: the UK-resident portion is taxed on worldwide income; the non-resident portion after departure is taxed only on UK-source income. For UK tax on foreign income purposes, the date of departure is the date non-UK-residency is established under the SRT automatic overseas test -- not the date of physical departure from the UK. HMRC’s HMRC6 booklet (gov.uk/government/publications/hmrc6-residence-domicile-and-the-remittance-basis) provides a comprehensive overview of the UK tax residency rules.

Finance Act 2025: FIG regime and non-dom abolition

The Finance Act 2025 abolished the non-domicile status that had existed in UK tax law for over 200 years, effective 6 April 2025. Under the old remittance basis, UK-resident non-doms could elect to be taxed only on foreign income remitted to the UK, sheltering unremitted foreign income from UK tax indefinitely. From 6 April 2025: the remittance basis is no longer available; UK-resident individuals are taxed on worldwide income and gains from day one of UK tax residency (subject to the FIG transitional exemption). The 4-year FIG (Foreign Income and Gains) regime provides a transitional exemption: qualifying individuals who have not been UK-resident in any of the prior 10 consecutive tax years are exempt from UK income tax and CGT on all foreign income and gains for their first 4 tax years of UK residency; after 4 years, worldwide income becomes fully UK-taxable. The Temporary Repatriation Facility (TRF) was introduced alongside the FIG regime to allow former non-doms to remit pre-2025 foreign income to the UK at a reduced flat rate (12% for 2025/26 and 2026/27; 15% for 2027/28, per Autumn Budget 2025 OOTLAR). HMRC’s guidance on the FIG regime and TRF is at gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis.

Residence-based IHT under Finance Act 2025

The Finance Act 2025 also replaced domicile with a residence-based test for UK Inheritance Tax (IHT) from 6 April 2025. The long-term UK resident test: individuals who have been UK-resident in at least 10 of the prior 20 tax years are "long-term UK residents" subject to UK IHT on their worldwide estate, including foreign assets (overseas bank accounts, foreign property, non-UK investments). The IHT tail: on leaving the UK, the worldwide IHT charge persists for a "tail period" proportional to the number of UK-resident years (up to a maximum of 10 years for those with 20 UK-resident years). During the tail period, all worldwide assets are within the UK IHT estate; after the tail expires, only UK-sited assets are subject to UK IHT. UK IHT is charged at 40% on the taxable estate above the nil-rate band (£325,000 for 2025/26, frozen to April 2030) plus the Residence Nil-Rate Band (£175,000 where UK residential property passes to direct descendants). Foreign assets -- UAE bank accounts, Australian property, French investments -- are all within the worldwide IHT estate during the tail period for long-term UK residents. HMRC’s IHTM at gov.uk/hmrc-internal-manuals/inheritance-tax-manual is the technical IHT reference.

Double taxation conventions and foreign income relief

The UK has over 130 double taxation conventions (DTCs) with overseas countries (full list at gov.uk/government/collections/tax-treaties). DTCs allocate taxing rights on different income types between the UK and the treaty partner country, and provide mechanisms to eliminate or reduce double taxation. Common DTC provisions relevant to UK nationals receiving foreign income: (1) employment income -- typically taxable only in the country where the work is performed; a UK national working entirely in the UAE pays no UK income tax on UAE salary under the UK-UAE DTC; (2) dividends -- typically taxable in the country of residence, with a reduced withholding rate (0-15%) in the source country; (3) rental income -- typically taxable in the country where the property is situated (UK rental income remains UK-taxable regardless of residence); (4) pensions -- private pensions are typically taxable in the country of residence (not the source country) under most DTCs; government service pensions (NHS, civil service, armed forces) remain UK-taxable regardless of residence. For UK residents receiving foreign income subject to overseas tax, Foreign Tax Credit Relief (HMRC Income Tax Manual, gov.uk/hmrc-internal-manuals/income-tax-manual) allows a credit for overseas tax paid against the UK tax liability on the same income, preventing true double taxation. HMRC’s guidance on foreign income at gov.uk/tax-foreign-income is the starting reference.

UK dividend tax from 6 April 2026

UK dividend tax rates changed from 6 April 2026 under the Autumn Budget 2025 (OOTLAR at gov.uk/government/publications/autumn-budget-2025-overview-of-tax-legislation-and-rates-ootlar): ordinary rate 10.75% (was 8.75% in 2025/26); upper rate 35.75% (was 33.75%); additional rate 39.35% (unchanged). These rates apply to UK-resident taxpayers on dividends above the £500 dividend allowance for 2025/26. Non-UK-residents are generally not subject to UK income tax on dividends from UK companies under most DTCs; however, UK dividend withholding tax may apply at the DTC-specified rate (typically 0-15%) before the dividend is paid. UK residents who receive foreign dividends pay UK tax at the domestic dividend rate (10.75%/35.75%/39.35%) with a foreign tax credit for any overseas withholding tax paid. For non-dom former residents now subject to worldwide income taxation under the Finance Act 2025 rules, overseas dividends that were previously sheltered under the remittance basis are now fully UK-taxable at the domestic rate -- a significant change from the pre-2025 position.

Reporting UK tax on foreign income: Self Assessment obligations

UK residents who receive foreign income must declare it on a UK Self Assessment tax return. The relevant supplementary forms are: SA106 (Foreign income supplementary pages -- for foreign employment, overseas rental, foreign dividends, and foreign pension income); SA108 (Capital Gains Summary -- for gains on overseas assets); and SA109 (Residence, Remittance Basis -- for non-resident declarations, remittance basis elections pre-Finance Act 2025, and TRF claims). The Self Assessment online filing deadline for 2025/26 is 31 January 2027. Non-UK-residents who have UK-source income above the personal allowance (£12,570 for 2025/26) must also file SA100 + SA109 + the relevant supplementary pages (SA105 for UK rental; SA106 for UK government service pension if relevant). HMRC’s Self Assessment guidance at gov.uk/self-assessment-tax-returns confirms the filing obligations for UK residents and non-residents with UK-source income. Failure to declare foreign income on a UK Self Assessment return is subject to HMRC discovery assessments for up to 20 years in cases of deliberate non-disclosure.

This article is for general information only and does not constitute tax, legal, financial or immigration advice. Rules and rates change; verify with the primary sources cited or consult a qualified adviser before acting.

FAQ

Are UK nationals taxed on foreign income if they live abroad?

Non-UK-residents (who have established non-UK-residency under the SRT) are generally not subject to UK income tax on foreign income -- only on UK-source income (UK rental, UK employment for UK duties, UK pension). UK residents are taxed on worldwide income regardless of where it arises. The SRT (gov.uk/guidance/the-statutory-residence-test-srt) determines UK tax residency annually; HMRC’s guidance on tax on foreign income is at gov.uk/tax-foreign-income/residence.

What is the 4-year FIG regime and who benefits?

The 4-year Foreign Income and Gains (FIG) regime (Finance Act 2025, from 6 April 2025) exempts qualifying UK residents from UK income tax and CGT on all foreign income and gains for their first 4 tax years of UK residency, provided they have not been UK-resident in any of the prior 10 consecutive tax years. It benefits UK nationals returning from a 10+ year absence abroad; they can shelter all foreign income from UK tax for 4 years on return, regardless of remittance to the UK. HMRC guidance at gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis.

What happened to non-domicile status in 2025?

The Finance Act 2025 abolished non-domicile status from 6 April 2025. The remittance basis (which allowed UK-resident non-doms to shelter unremitted foreign income from UK tax) is no longer available. UK-resident individuals are now taxed on worldwide income from day one of UK residency, subject to the 4-year FIG transitional exemption. Former non-doms can use the Temporary Repatriation Facility (TRF) to remit pre-2025 foreign income to the UK at 12% (2025/26 and 2026/27) or 15% (2027/28) rather than standard income tax rates.

How do double taxation conventions (DTCs) reduce UK tax on foreign income?

The UK’s 130+ DTCs (gov.uk/government/collections/tax-treaties) allocate taxing rights on income between the UK and the treaty partner. Most DTCs provide that: employment income is taxed in the country where the work is performed; private pensions are taxable in the country of residence; and rental income is taxable in the country where the property is sited. Foreign Tax Credit Relief (SA106) prevents double taxation by crediting the overseas tax paid against the UK tax liability on the same income. Check the specific DTC applicable to your country of residence for the precise allocation of taxing rights.

What are the current UK dividend tax rates for 2026?

UK dividend tax rates from 6 April 2026 (Autumn Budget 2025 OOTLAR): ordinary rate 10.75% (was 8.75%); upper rate 35.75% (was 33.75%); additional rate 39.35% (unchanged). These apply to UK-resident taxpayers on dividends above the £500 dividend allowance for 2025/26. Non-UK-residents pay UK tax on dividends at the rate specified in the applicable DTC (typically 0-15% withholding), not at the domestic rates above. Former non-doms who are now UK-resident must declare worldwide dividends at domestic rates from 2025/26.

What is the Finance Act 2025 IHT change and how does it affect UK nationals abroad?

Finance Act 2025 (from 6 April 2025) introduced residence-based IHT: individuals UK-resident in at least 10 of the prior 20 tax years are "long-term UK residents" with worldwide IHT exposure including a tail period (up to 10 years) after departure. During the tail, all worldwide assets -- overseas property, foreign bank accounts, non-UK investments -- are subject to UK IHT at 40% above the nil-rate band (£325,000, frozen to April 2030). Former non-doms who were previously outside UK IHT must reassess their position under the new rules from 6 April 2025.

Sources

1. HMRC -- Statutory Residence Test (SRT) guidance and split-year treatment (verified 26 April 2026)
2. HMRC -- UK tax on foreign income: residency and reporting rules (verified 26 April 2026)
3. HMRC -- Finance Act 2025 FIG regime, TRF and non-dom abolition guidance (verified 26 April 2026)
4. GOV.UK -- UK double taxation conventions (full list of 130+ treaties) (verified 26 April 2026)
5. GOV.UK -- Autumn Budget 2025 OOTLAR (dividend rates 10.75%/35.75%/39.35% from 6 April 2026; TRF rates) (verified 26 April 2026)