- If you are a UK resident, you pay tax on your income from any overseas trades, professions, property and investments. Your overseas income is calculated in much the same way as your UK income.
- If you are a UK resident but are not domiciled in the UK or not ordinarily resident, you are also liable to pay tax on your foreign income, whether or not you bring it into the UK, unless you opt to be taxed on the 'remittance basis'. If you do so, only income you bring into the UK will be taxed. However, if you choose the remittance basis, you may lose your personal tax allowances and, after seven years' UK residence, have to pay a £30,000 annual fee.
- Employees who are resident and ordinarily resident in UK pay tax on their remuneration wherever the duties of their employment are carried out.
- If you are an employee who is not ordinarily resident in the UK, you will currently pay tax on your overseas remuneration unless the remittance basis applies.
- Non-UK residents are not normally liable to UK tax on their overseas income.
- If you are a non-UK resident, you will generally pay tax on your UK income.
- Tax may be deducted at source from your UK property income.
- Only certain non-residents are entitled to personal allowances. They include all Commonwealth citizens, all nationals of European Union states, Norway, Iceland and Liechtenstein and all residents of the Channel Islands and Isle of Man. In any event, if you opt for the remittance basis, you are not entitled to personal allowances if your foreign income and gains in a tax year total £2,000 or more.
- Your UK income tax liability as a non-resident is subject to an upper limit. The calculation is complex, but the broad effect is that no tax is charged on your UK bank and building society interest or state pension paid while you are not resident in the UK, provided you do not claim any personal allowances.
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Residence and domicile
02: The taxation of non-UK income
The FSA does not regulate tax advice. Tax rules are subject to change.
