If you're taxed twice
You may be taxed on your foreign income by the UK and by the country where your income is from.
You can usually claim tax relief to get some or all of this tax back. How you claim depends on whether your foreign income has already been taxed.
There’s a different way to claim relief if you’re a non-resident with UK income.
Apply for tax relief before you get taxed on foreign income
You have to apply for tax relief in the country your income’s from if:
- the income is exempt from foreign tax but is taxed in the UK (for example, most pensions)
- required by that country’s double-taxation agreement
Ask the foreign tax authority for a form, or apply by letter if they do not have one.
Before you apply, you must prove you’re eligible for tax relief by either:
- completing the form and sending it to HMRC - they’ll confirm whether you’re resident and send the form back to you
- including a UK certificate of residence, if you’re applying by letter
Once you’ve got proof, send the form or letter to the foreign tax authority.
If you’ve already paid tax on your foreign income
You can usually claim Foreign Tax Credit Relief when you report your overseas income in your tax return.
How much relief you get depends on the UK’s ‘double-taxation agreement’ with the country your income’s from.
You usually still get relief even if there is not an agreement, unless the foreign tax does not correspond to UK Income Tax or Capital Gains Tax.
What you’ll get back
You may not get back the full amount of foreign tax you paid. You get back less if either:
- a smaller amount is set by the country’s double-taxation agreement
- the income would have been taxed at a lower rate in the UK
HMRC has guidance on how Foreign Tax Credit Relief is calculated, including the special rules for interest and dividends in ‘Foreign notes’.
You cannot claim this relief if the UK’s double-taxation agreement requires you to claim tax back from the country your income was from.
Capital Gains Tax
You’ll usually pay tax in the country where you’re resident and be exempt from tax in the country where you make the capital gain. You will not usually need to make a claim.
You have to pay Capital Gains Tax on UK residential property even if you’re not UK resident.
When to claim relief
There are different rules if your gain comes from an asset that either:
- cannot be taken out of the country, such as land or a house
- you’re using for business in that country
You’ll need to pay tax in both countries and get relief from the UK.
You can be resident in both the UK and another country. You’ll need to check the other country’s residence rules and when the tax year starts and ends.
HMRC has guidance for claiming double-taxation relief if you’re dual resident.