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How to pay tax on your foreign income

TaxScouts -> Guides

We've updated this guide on 15th February 2021

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.

Annual self-employment income
£
Self-employment expenses
£
Select tax year
Income after tax
£37,986
Income tax
£7,300
NI
£3,714
Total income tax
£7,300
£12,500 taxed at 0%
£36,500 taxed at 20% : £7,300
Total NI contributions
£3,714
Class 2 NI: £159
Class 4 NI at 9% : £3,555
What you’re left with
£37,986

Hey there! We really hope this calculator helped you. Tax matters can be a dreadful topic at times. We know. That’s why we started TaxScouts.
A stress-free way to getting your taxes done.

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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:

Income tax breakdown

You pay no income tax on first £12,500 that you make

You pay £7,300 at basic income tax rate (20%) on the next £36,500

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.

Looking for tax help?

Or see our Guides, Calculators or Taxopedia

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