Do You Have To Pay Tax In The UK If You Are Receiving Money From Abroad?
By
HuutiMoney
If you are wondering whether or not you have to pay tax in the UK while receiving money from abroad, you will find the answer to this question in the following blog post; along with detailed guidance on how to manage the money coming from abroad.
Do You Have To Pay Tax In The UK If You Are Receiving Money From Abroad?
Whether or not you have to pay tax if you are receiving money from abroad while living in the UK primarily depends on the following factors:
- your UK residency status
- whether you are receiving a gift, income or savings
- the country from where the money is being received from
When it comes to one’s UK residency status, it is important to understand that individuals living in the UK who are not UK residents will not have to pay taxes if they are receiving money in the form of foreign income.
This includes the following types of income:
- wages or salary if they work outside the UK
- income from foreign investments, such as dividends and savings interest
- rental income from property located outside the UK
- income from pensions from outside the UK
However, the case is different for UK residents. If you are a UK resident who is receiving money from abroad as a foreign income, you will have to pay tax according to UK taxation law.
On the other hand, UK residents who have a permanent home or domicile outside the UK (this includes England, Scotland, Wales and Northern Ireland) may not have to pay tax when they receive money from abroad.
Having to pay tax on money received from abroad means that you would need to declare your foreign income to the HMRC through a Self-Assessment tax return.
However, if your income is already being taxed in the country from where the money is being sent, you can apply for tax relief in the UK to avoid double taxation.
That said, if you receive money from abroad as a gift (and not a source of income), you don’t have to pay tax on it in the UK and this is irrespective of your residency status. It is only if that sum is deposited in a UK bank with the intention of earning interest on it, the income generated from interest on the deposit will be taxable according to UK laws.
How Does Your Residency Status In The UK Affect The Money You Receive From Abroad?
Your residency status in the UK is a primary factor that influences the tax treatment of the money you receive from abroad.
You will be considered a UK resident if the following situations apply to you and will be required to pay tax on the money you receive from abroad:
- spending 183 or more days in the UK during one tax year
- having the only home in the UK for at least 91 days and staying in or visiting it for at least 30 days during the tax year
- working full-time in the UK for any period of 365 days
On the other hand, you will not be considered a UK resident under the following situations and will not have to pay tax on the money you receive from abroad:
- spending less than 16 days in the UK
- working abroad full-time
- spending less than 91 days in the UK, (out of this no more than 30 days were spent working)
If you are still unsure about your residency status, you can check your residency status online.
How Does Your Domicile In The UK Affect The Money You Receive From Abroad?
Your domicile or a permanent home is another key factor that determines whether or not you will have to pay tax on money received from abroad. If you live in the UK but your domicile or permanent home is outside the UK, you will not have to pay tax on the amount your receive from abroad.
However, even if you are non-domiciled, if the amount you receive from abroad is less than £2,000 you will not have to pay income tax in the UK.
To learn more about how your residency and domicile status influence whether or not you pay tax in the UK on foreign income as well as the remittance basis of taxation, you can review the Guidance note for residence, domicile and the remittance basis on the Government’s website.
Conclusion:
The above discussion helps to conclude that whether or not one has to pay tax in the UK on money received from abroad depends on certain factors with residency status being the most important one. Even if one lives in the UK, only individuals classified as UK residents have to pay tax on the money they receive from abroad while non-UK residents are exempt.
References:
Tax on foreign income: ‘Non-domiciled’ residents – GOV.UK