Double Taxation Agreement

A Double Taxation Agreement (DTA) is an agreement between two countries. It prevents you from paying tax twice on the same income. If both countries have a Double Taxation Agreement, you don’t pay additional tax on the same income, but you may still have to file a tax return in both countries. Some examples of jobs roles that may need to be aware of Double Taxation Agreement laws include cruise ship workers, freelance consultants who work abroad as part of their role, or diplomatic or embassy workers. Here’s a list of current double taxation agreements between the UK and other countries.

I’m a UK resident but earn foreign income

  • HMRC will tax your worldwide income. You need to include both your UK and foreign income on your UK Self Assessment
  • Without a DTA, iIf you’ve already paid tax on your foreign income outside the UK, you have to pay tax in both countries
  • With a DTA, you can claim back the foreign income tax as tax relief for your UK Self Assessment tax return

I’m not a UK resident but I earn income from the UK

  • You must complete a UK Self Assessment
  • Only include and pay tax on income earned in the UK
  • With a DTA, you can usually claim back the UK tax paid on your income in the other country
  • You can also choose to stay a non-resident by claiming the “Remittance basis” of taxation. You’ll still need to pay tax on UK earnings in the UK but your foreign earnings will be taxed elsewhere

I’m a tax resident in both countries

  • You’ll have to check the DTA between that country and the UK
  • Check the rules to make sure that you don’t pay tax twice

 

Frequently Asked Questions

  • Do all nations have Double Taxation Agreements with the UK?

    Not at present – if you are working abroad then you need to ensure you understand your tax obligations in full to avoid non-payment and potential fines. You can usually find out about tax obligations via the national government websites, for their equivalent of HMRC.

  • How long should I be storing my Tax Records?

    In the UK, you must keep your tax records for at least six years from the end of the relevant tax year. Accounting software can help you to digitally store your records without taking up space in your office!

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