As the world becomes increasingly globalized, it is ever more inevitable that people will have income from overseas, whether this be income from a property left by a long-lost relative or from a time spent living abroad. The tax position is simple: if you are a UK resident you will pay UK tax on your worldwide income.
But after that it gets more complex. Tax across borders leads to a whole host of issues, as the country from where the income originates often also want a tax slice of your income. Depending on the country and the type of income it will often withhold this at source and sometimes incorrectly. There are provisions in place to prevent income being taxed twice, but this often requires making sense of the country’s specific double taxation treaty with the UK, provided there is one.
And don’t even think it may be easier not to declare your foreign income. Tax authorities all over the world share information with each other and HMRC has made it quite clear that they use that information to track down undeclared income. Penalties for not declaring foreign income can be twice as much as those for not declaring UK income!
If you want to make sure you are being taxed correctly in the UK on your foreign income, please speak to your local AIMS accountant.