Declaring Foreign Income

If you receive income from non-UK sources, you may need to fill in the supplementary form SA106 as part of your UK Self Assessment. This post explains the essentials of foreign income, shows some of the tricky areas, and outlines how we can help guide you through it.

Foreign Income: What You Need to Know as a UK Taxpayer

If you receive income from non-UK sources, you may need to fill in the supplementary form SA106 as part of your UK Self Assessment. This post explains the essentials of foreign income, highlights complex areas, and outlines how we can help you stay compliant and avoid unnecessary tax exposure.

What Counts as Foreign Income

According to HMRC’s definition, foreign income is any income arising outside England, Scotland, Wales, and Northern Ireland.
This includes income from the Channel Islands and the Isle of Man, which are treated as foreign for UK tax purposes.

Foreign income covers (but is not limited to):

• Wages or employment income earned abroad
• Interest from overseas bank accounts or savings
• Dividends from non-UK companies
• Rental income from overseas properties
• Overseas pensions or annuities
• Capital gains from selling assets located outside the UK

If you’re UK tax resident, you normally must declare all foreign income in your UK Self Assessment — unless you’re eligible for specific relief (for example, the Foreign Income and Gains regime starting April 2025) or you use the remittance basisas a non-domiciled individual.

Get It Right: Report Foreign Income

To correctly report your overseas earnings, begin by confirming your residence statusfor UK tax purposes — being UK resident generally means you must declare your worldwide income. Next, identify all sources of foreign income, such as wages earned abroad, rent from overseas property, dividends or interest from non-UK investments, pensions, or gains from the sale of overseas assets. Once identified, convert all figures into pounds sterling. Finally, complete the foreign income section (SA106) of your tax return, ensuring all details are accurate and consistent with your records.

Some of the more complex issues of Foreign Income

• Unremittable income: If you cannot bring your foreign income into the UK due to restrictions, special rules may apply.
• Double taxation: When you pay tax abroad and in the UK, you must check whether there is a double-taxation agreement, and apply correctly for credit or relief.
• New regime from 6 April 2025: For UK resident individuals, the Foreign Income and Gains (FIG) regime may apply — this means worldwide income and gains are taxable on an arising basis in many cases.
• Which form to use: SA106 covers many foreign income types, but some foreign employment income must go on SA102 and then the foreign section may only be used for foreign tax paid.

Why you should seek professional help

Foreign income rules are intricate and mistakes are easy to make — under-reporting or mis-applying relief can lead to penalties or unexpected tax bills. As experienced UK-tax accountants we help ensure you meet your obligations, claim the correct reliefs, and remain compliant.

Whether you’ve just started receiving overseas income, or you have several complex income sources abroad, we can guide you through your UK tax return so you report correctly and avoid surprises.

Seek Professional Help with Your Tax Return

Dealing with foreign income can be complex — from understanding what counts as overseas earnings to applying the correct tax reliefs and exchange rates.
At Elaga Accountancy, we specialise in helping UK taxpayers report their overseas income accurately and efficiently.

We’ll help you classify your income correctly, evaluate available tax reliefs, calculate and convert your foreign income into pounds, and identify any exemptions or double-taxation reliefs you may be entitled to.
Our goal is to ensure your Self Assessment is complete, compliant, and optimised — so you pay only what’s due and nothing more.

***Contact us to learn more.

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