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Double Taxation Agreement (DTA)

A Double Taxation Agreement (DTA) is an agreement between two countries with the goal of making sure that people don’t pay tax twice on the same income (which can happen otherwise, because many countries have different rules on how they treat their tax residents).

If both countries have a DTA, you wouldn’t need to pay any additional tax on the same income, but you may still have to file a tax return in both countries. You can see a list of the current double taxation agreements between the UK and other countries here.

If you’re a UK tax resident but you earned foreign income:

  • HMRC will tax your worldwide income, which means that you need to include both your UK and your foreign income on your UK Self Assessment
  • if you’ve already paid tax on your foreign income in that country, without a DTA you have to pay tax on this income in both countries
  • however, if the UK has a Double Taxation Agreement with that country, then you can claim back the tax you paid on the foreign income as tax relief for your UK Self Assessment tax return.

If you’re not a UK tax resident but you earned income from the UK:

  • you will still need to complete a UK Self Assessment
  • however, as a non-resident, you would only include your UK income and pay tax on income earned in the UK
  • if the UK has a DTA with the other country, you should be able to claim back the UK tax paid on your income in the other country
  • usually you’re a UK tax resident if you live here for more than half a year, but you can also choose to stay a non-resident by claiming the “Remittance basis” of taxation. You’ll still need to pay tax on UK earnings in the UK but your foreign earnings will be taxed elsewhere

If you’re tax resident in both countries:

  • you’ll have to check the DTA between that country and the UK
  • there will be rules to make sure that you don’t pay tax twice.

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