1. Establish residence and reporting scope first
Whether foreign income belongs on the UK return depends first on UK residence for 6 April 2025 to 5 April 2026. Nationality, immigration status, a foreign address or the country holding the account does not decide the answer. Record UK and overseas days, homes, work patterns and relevant ties, and consider whether a split-year case applies.
UK residents will normally pay UK tax on foreign income unless a relief applies. Non-residents do not normally pay UK tax on foreign income, although UK-source items and treaty questions remain separate. Do not assume that paying tax abroad removes the UK filing requirement.
2. Build one source schedule before completing SA106
Create a row for each income source with the country, payer, income type, gross amount, payment or accrual date, currency, foreign tax deducted and supporting document. Include foreign interest, dividends, pensions, employment, rental income and other relevant amounts. Keep gains on a separate disposal schedule.
Reconcile the schedule to every bank, broker, payroll, pension and property statement. Record transfers between your own accounts separately so they are not mistaken for income. A foreign tax return is useful evidence, but its categories and reporting period may not match UK rules.
3. Convert the income and tax consistently
Keep the foreign-currency figure and the sterling conversion together. Record the rate, source and date or period used. HMRC publishes monthly rates, yearly averages and spot rates, but the appropriate approach depends on the item and facts. Avoid using the year-end balance-sheet rate for every transaction merely because it is easy to obtain.
Use a consistent, supportable method and retain the calculation. Convert gross income and foreign tax separately so the return does not accidentally report only the net cash received.
4. Match foreign tax credit to the same income
Foreign Tax Credit Relief is not simply the amount shown as overseas withholding. Identify which income and period the foreign charge relates to, whether the tax is final and whether UK law or a double taxation agreement limits the source country’s taxing right.
The credit is generally restricted and cannot exceed the relevant UK tax. Excess foreign tax is not automatically refundable by HMRC. A reclaim may instead be needed from the overseas authority. Keep the foreign assessment, withholding certificate, payment date and treaty analysis with the return file.
5. Treat a FIG claim as a separate decision
The four-year foreign income and gains regime may be available to a qualifying new UK resident, depending on prior non-UK residence and the year of the claim. Relief is claimed by category, not by labelling an entire account exempt. The SA106 and SA109 entries must reconcile.
A claim can affect allowances and reliefs, so compare the complete UK result before filing. HMRC states that the normal filing date for 2025/26 is 31 January 2027 and that a 2025/26 FIG claim can generally be made by 31 January 2028. That later claim deadline does not defer the normal filing or payment obligations.
6. Keep historic remittance-basis funds distinct
The remittance basis is no longer available for income and gains arising from 6 April 2025. However, pre-6 April 2025 foreign income and gains that were previously subject to the remittance basis can still be taxed when remitted. Do not combine them with current-year income or clean capital.
Preserve historic bank statements, account movements and earlier return claims. Mixed-fund tracing and the Temporary Repatriation Facility are specialist areas; obtain advice before moving or restructuring historic balances.
7. Finish with a reviewable return file
Before filing, reconcile totals to SA106, SA109 and any other relevant pages, check that foreign tax has not been deducted twice, and explain estimates or missing documents. Review the calculation, payment and payments on account. The normal online filing and payment deadline is 31 January 2027.
UA Tax supports internationally connected individuals in London and across the UK. Personal tax services start from £400. For residence, claims, historic funds or treaty analysis, the work may require a separately scoped consultation or advisory project. Get in touch with the tax year, countries involved, income types and whether HMRC has already contacted you. We will agree scope and fees before work begins.
For advice on your own circumstances, see our foreign income return records service and agree the scope before acting.
Official sources and further reading
These primary sources support the framework above. Check the current version before acting because tax law and HMRC guidance can change.