How to pay tax on your foreign income

We've updated this guide on 2nd August 2019

If you live in the UK and have foreign income, you’ll usually have to pay UK tax on it.

You do this by filing a Self Assessment tax return – TaxScouts can help you do it 100% online.

What kinds of foreign income will I pay tax on?

Most types of income will be taxed the same way as any UK income:

How much will I have to pay?

Foreign income is taxed in the UK the same way as income from UK sources.

The easiest way to figure out how much you need to pay is by using this income tax calculator.

Your annual income
£
Business expenses
£
Select tax year
Income after tax
£37.9k
Income tax
£7.3k
NI
£3.8k
Total income tax
£7,300.00
£12,500.00 taxed at 0%
£36,500.00 taxed at 20% : £7,300.00
Total NI contributions
£3,789.24
Class 2 NI: £156.00
Class 4 NI at 9% : £3,633.24
What you’re left with
£37,910.76

How your income tax is calculated

As a self-employed you have to pay your income tax and national insurance contributions yourself during your annual self assessment. Our calculator helps you quickly assess how much payment is due.

However you may be eligible for a tax refund when:

  1. You already made tax payments for the year but your annual income ended up smaller than planned
  2. You have done things that qualify for tax relief (made private pension contributions, give to charity, etc)

In your case when you earn £49,000.00:

Income tax breakdown

You pay no income tax on first £12,500.00 that you make

You pay £7,300.00 at basic income tax rate (20%) on the next £36,500.00

If you made profits from selling foreign investments or property, use our capital gains tax calculator instead.

How do I know if I’m a UK resident?

HMRC considers you a UK resident if you either:

  • spent 183 days or more in the UK during that tax year
  • owned or rented your only home for 90 days or more in the UK, and spent at least 30 days here.

If your status changes during the tax year you might be able to pay UK tax only on the money you made as a UK resident. 

What if my permanent home is abroad?

Yes, you can be a UK resident while still having your permanent home abroad.

This is called being a “non-domiciled resident“:

  • if you only have under £2,000 of foreign income and keep it abroad, you don’t pay UK tax on it
  • if you have foreign income over £2,000, then submit a Self Assessment tax return and either pay UK tax on it or contact HMRC and claim “the remittance basis”
  • in any case, you still pay UK tax on any income and gains from the UK.

What does the “remittance basis” mean?

  • you only pay UK tax on the income or gains you bring to the UK
  • but you lose your tax-free personal allowance and CGT allowance
  • and you also have to pay £30,000 or £60,000, depending on how long you’ve been a resident in the UK.

We don’t recommend it unless you’re very wealthy.

What if I live abroad and have UK income?

You have to pay UK tax on it – read our guide on how to pay UK taxes when living abroad.

Need help with your tax return?

Get your self assessment prepared for you online by certified accountants for £119

Online self assessment preparation assisted by professional accountants

How TaxScouts works

Simple online tax assessment

1. Simple online tax assessment

Our online tax-bot will go over your tax situation and will make sure you won’t overpay your taxes.

Chat to human advisors

2. Chat to human advisors

You can talk to one of our tax assistants at any time during the process when you have any questions.

We’ll sort your documents online

3. We’ll sort your documents online

We’ll tell you exactly what documents you need and sort them for you online. You just upload them or snap a picture with your phone.

Everything gets prepared for you

4. Everything gets prepared for you

Your certified accountant will go over your details & prepare your tax return for you to review. It will be filed on your behalf once you approve it.

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Who our service is for

First time tax filers

We have a simple online service that guides you through the entire process. Regardless of your reasons for doing your tax return we'll help you get it done right.

Construction workers

We'll prepare your self assessment and help to maximise your CIS tax refund. We have the lowest fees in the industry and you don't have to pay up front if you're eligible for a refund.

People living overseas

Our service allows people living abroad to prepare their income tax return online. We are able to process all returns regardless of your current country of residence.

Company directors

UK company directors are required to file their self assessment annually. TaxScouts handles this through a simple online process.

Landlords

Long Lets, Airbnb, Capital Gains. TaxScouts will sort out your self assessment and take away the worry of tracking all the recent tax changes.

Self-employed

TaxScouts ensures the self employed don't overpay on their taxes. We'll help you benefit from all the tax breaks and deductions that can be applied to your return.

And for everyone else who needs to do their self assessment

At TaxScouts we appreciate that tax returns are highly individual. Before you get assigned an accountant we make sure to understand your circumstances and help you build your optimal tax profile.