How are foreign gains and income taxed?

Foreign income tax and the amount you’ll pay depend on various factors including your UK tax residency status, the type of income you receive and whether you qualify for tax relief.

By staying on top of current taxes, you may prevent yourself from receiving a surprise tax bill.

There are various types of income you may pay tax on, and the rules on UK residency can be complex.

This guide on foreign gains and income tax will help you understand the fundamental rules and outline the tax you can expect to pay if you earn money from outside the UK, including how the rules changed in April 2025.

Paying tax on foreign gains and income

Foreign income is anything earned from outside England, Scotland, Wales and Northern Ireland. Foreign gains generally arise when you sell or dispose of overseas assets for a profit.

If you’re a UK resident and you only earn income from any of these four countries, the associated tax is relatively simple.

But if you are a resident of the UK and earn foreign gains and income, tax can become more complex. 

You can earn foreign income and gains in many ways:

• Earnings from work performed outside the UK

• Profits from a foreign business that you run or have shares in

• Income from overseas property rentals

• Profits from the sale of overseas assets — such as property or shares in a company

• Interest earned through foreign savings accounts

• Pension income from overseas

• Dividends from shares in overseas companies

Whether you need to pay UK tax depends on your residence status, the type of income or gain, and whether any exemptions or reliefs apply.

Am I a UK resident?

Working out whether you are a resident of the UK is key to determining whether you’ll have to pay UK tax on foreign gains and income and how much.  

HMRC says you will be considered a UK resident if the following applies:

• You meet one of the automatic UK tests or the UK sufficient ties test

• You don’t meet any of the automatic overseas tests

The automatic UK tests are as follows:

• You spent 183 days or more in the UK during the tax year

• You had a home in the UK for at least 91 consecutive days, at least 30 of which fell within the tax year, and you were present in that home on at least 30 days during the year. You must also have had no overseas home during the relevant period, or spent fewer than 30 days in each overseas home during the tax year.

• You worked full-time in the UK for 365 days, including at least one day during the tax year you’re checking subject to rules about the proportion of working days spent in the UK.

You may also be a UK resident if you have additional ties to the UK, known as the sufficient ties test. These can include family, accommodation and work connections.

The automatic overseas tests are as follows:

• You lived in the UK for fewer than 16 days (or 46 days if you weren’t a UK resident in the previous three tax years)

• You worked overseas full-time (for at least 35 hours a week on average) and stayed in the UK fewer than 91 days (of which 30 or fewer were spent working), provided you meet the other conditions.

It’s important to note you can still be considered a UK resident, even if your permanent home is abroad.

Since 6 April 2025, UK tax on foreign income and gains has generally depended on residence rather than domicile. Qualifying new UK residents may be able to claim relief under the four-year foreign income and gains (FIG) regime.

Does domicile still affect UK tax?

In UK law, your ‘domicile’ status could traditionally affect the tax you pay. Broadly speaking, domicile refers to where your permanent home is.

However, the rules are complex, and you can remain domiciled in the UK even after living overseas for many years.

Likewise, living in the UK for many years won’t necessarily affect your domicile status if you previously lived abroad.

Before April 2025, people with non-domiciled status, often known as ‘non-doms’, could qualify for special tax treatment of foreign income and gains. Under the remittance basis, eligible foreign income and gains were generally taxed only when brought into the UK.

However, this system was abolished on 6 April 2025. UK residents are now generally taxed on their worldwide income and gains, regardless of domicile, unless they qualify for an exemption or relief.

A new four-year foreign income and gains (FIG) regime allows qualifying individuals who become UK tax residents after at least 10 consecutive tax years of non-UK residence to claim relief on eligible foreign income and gains.

Inheritance tax rules also changed in April 2025. Liability for overseas assets now generally depends on whether someone is a long-term UK resident, rather than their domicile status.

Changes to domicile rules

In April 2025, the old non-dom status was scrapped and replaced with  a residence-based system for taxing foreign income and gains.

This new system means UK residents are generally taxed on their worldwide income and gains, regardless of their domicile status, unless they qualify for relief.

Under the new four-year foreign income and gains (FIG) regime, eligible new UK residents can claim relief on most foreign income and gains arising during their first four tax years of UK residence. To qualify, they must not have been UK tax resident in any of the previous 10 consecutive tax years.

Claiming FIG relief means giving up the UK Income Tax personal allowance and Capital Gains Tax annual exempt amount for that tax year.

The UK government has also introduced a Temporary Repatriation Facility for people who previously used the remittance basis. This allows qualifying foreign income and gains arising before 6 April 2025 to be designated for tax at

Inheritance tax rules have also changed. You will be assessed for inheritance tax on non-UK assets if you are classed as a long-term UK resident — generally someone who has been UK resident for at least 10 of the previous 20 tax years. Depending on how long you lived in the UK, liability can continue for several years after you leave.

It's a good idea to seek expert advice to support your finances, especially as the rules have recently changed.

Unbiased can quickly find you an accountant who will help you every step of the way.

Can I claim overseas workday relief?

In April 2025, rules on overseas workday relief were also changed. This relief is now limited to £300,000 or 30% of your total employment income, whichever is lower.

Overseas workday relief allows you to get tax relief on your employment income relating to days you work outside the UK It is currently available for your first four years in the UK, depending on strict criteria including generally having been non-UK resident for the previous 10 tax years.

To claim overseas workday relief, you need to meet the criteria set out by HMRC.  

It’s a good idea to get advice as the rules are complex.

Paying UK tax if you have income or assets abroad

If you live in the UK but have income, investments or property overseas, working out what tax you owe can be more complicated.

As a UK tax resident, you will generally pay UK tax on an ‘arising’ basis. This means you’ll need to pay tax on your income and gains from the UK and abroad, regardless of whether you bring the money into the UK.

However, exemptions and reliefs may apply, including the four-year foreign income and gains (FIG) regime for qualifying new UK residents.

You may also owe UK inheritance tax on worldwide assets if you are classed as a long-term UK resident. 

What happens if you previously had non-dom status?

Before 6 April 2025, some non-domiciled UK residents could use the remittance basis of taxation. This meant they generally paid UK tax on foreign income and gains only when they brought the money into the UK.

The remittance basis has now been abolished for new foreign income and gains. However, if you previously used it, you may still owe UK tax when you bring certain income or gains from before 6 April 2025 into the UK.

You may qualify for the Temporary Repatriation Facility, which allows you to pay a reduced tax rate on qualifying foreign income and gains from before April 2025.

The rate is 12% for the 2025/26 and 2026/27 tax years, rising to 15% in 2027/28.

Need expert tax advice?

Navigating foreign taxation in the UK can be challenging, but we’re here to help.

Unbiased can connect you with a qualified accountant who will help guide you through the process and protect your income.