Foreign income without UK tax

HM Revenue and Customs released a new video on 21 October explaining the four-year foreign income and gains regime. It can remove UK tax from qualifying overseas amounts, but only for qualifying new residents and only within their first four years of UK tax residence.

The regime applies across the UK. Nationality and former domicile do not determine eligibility: tax residence and the preceding ten tax years do.

ADV · A003We build websites for tradespeople and sole traders — £219Customers see your work and prices and message you straight away. Ready in 3 days, £219 instead of £438.Advertise here

Who can claim?

You may qualify if all of these conditions are met:

• you are UK tax resident;
• you were not UK tax resident for at least 10 consecutive tax years immediately before your arrival or return;
• the year is within your first 4 consecutive UK tax years;
• you declare the overseas amount and make a specific claim in Self Assessment.

The four-year clock starts with the first year of UK tax residence, not the first year in which you claim. An unused year cannot be added at the end.

How many years remain?

A temporary period of non-UK residence does not pause the four-year window. You cannot claim for a non-resident year, and that year is not added later.

Which overseas amounts qualify?

The official list includes profits from a trade carried on wholly outside the UK, overseas property income, dividends from non-UK companies, interest from foreign bank accounts, some foreign pension income and gains on qualifying overseas assets.

Ordinary foreign employment income is outside this claim. Separate Overseas Workday Relief may apply to some duties performed abroad, so internationally mobile employees need a separate calculation.

ADV · A001ONLYWAY JEWELRY — gold, silver and platinumRings, chains, bracelets, earrings and pendants. Delivery across the UK.Advertise here

There is no maximum amount of relief. You can select particular sources and amounts, but each source must be disclosed and claimed separately.

What do you give up?

A claim is not automatically beneficial. Even if you claim relief for one small overseas amount, you lose for that year:

• the Income Tax Personal Allowance, normally £12,570;
• the Capital Gains Tax annual exempt amount of £3,000;
• Blind Person’s Allowance and relevant marriage allowances;
• the ability to use or carry certain foreign losses.

Compare two complete calculations: ordinary UK tax with all available allowances, and tax after relieving selected overseas income while losing those allowances. A claim can increase the bill when the foreign amount is modest.

How to make the claim

1. Establish your first resident year. Do not rely only on your arrival date; use the Statutory Residence Test.
2. List each source separately. Calculate interest, dividends, rents, business profit and gains for the UK tax year from 6 April to 5 April.
3. Model both outcomes. Include the loss of the £12,570 and £3,000 allowances and any effect on childcare support or the High Income Child Benefit Charge.
4. Complete Self Assessment. Use the residence and relevant supplementary pages to claim foreign income relief, foreign gains relief, or both.
5. Keep evidence. Bank statements and documents supporting dividends, rent and asset disposals should reconcile to each claimed amount.

Two different deadlines

The online 2025–26 tax return and tax due must be filed and paid by 31 January 2027. A claim for this relief for 2025–26 can be made or amended until 31 January 2028.

The extra year for the relief claim does not postpone ordinary tax payment. If the calculation is not settled, file an accurate return and pay the undisputed amount by January 2027, then amend within the claim window.

Professional UK tax advice is sensible where substantial overseas income, an asset sale, a foreign company, a trust or several countries are involved because the allowances lost may outweigh the relief.