🇬🇧UK Tax on Worldwide Income and Gains

Concept

A UK tax resident is normally taxed on worldwide income and gains as they arise, whether or not the money is ever brought to the UK. Non-residents are generally taxed only on UK-source income, so the gateway question is always UK tax residence under the Statutory Residence Test. From 6 April 2025 the arising basis is the default for everyone resident here: the old remittance basis has gone, and holding funds offshore no longer defers or removes the charge by itself.

Since 6 April 2025 a UK resident's foreign income and gains are taxed as they arise, and a custodian or broker statement rarely matches the UK result. Pooling rules, offshore-fund status, excess reportable income and foreign tax credit relief can each move the final number.

The 2025 reset

The non-dom regime and the remittance basis both ended on 6 April 2025. Residence rather than domicile now decides how foreign income and gains are taxed, and a parallel residence-based test has replaced domicile for inheritance tax. What changed and which windows are open is set out in the non-dom reform; the transitional layer of the TRF and rebasing sits in remittance basis after 6 April 2025.

The FIG regime in the computation

The Foreign Income and Gains regime takes a qualifying new resident's foreign income and gains out of the UK charge for up to four consecutive tax years. The eligibility test, including the age condition and the annual claim, is set out in the FIG regime. Foreign employment income within the same four-year window runs through Overseas Workday Relief (OWR), capped at the lower of £300,000 or 30% of qualifying employment income. The relief is claimed year by year on the SA109 residence pages and does not remove the obligation to report. Claiming forfeits the personal allowance and the CGT annual exempt amount for that year, while the relieved income still counts towards adjusted net income and can trigger the High Income Child Benefit Charge or remove access to tax-free childcare. And since Finance Act 2026 the deduction is made only from the income or gains it relates to — s 845A(3A) ITTOIA 2005, s 41P(4A) ITEPA 2003 and, for gains, paragraph 2(2) of Schedule D1 TCGA 1992, with effect for 2025-26 and subsequent years — so the computation runs category by category, and an unused balance of relief in one class does not shelter another. It does not shelter UK-source income, and distributions from offshore trusts and certain anti-avoidance charges need separate analysis.

Transition for former remittance-basis users

Long-term residents who used the old regime have two transitional reliefs. The Temporary Repatriation Facility lets them designate foreign income and gains that arose before 6 April 2025 at a flat 12% for the 2025/26 and 2026/27 tax years, rising to 15% for 2027/28. Designations run through Self Assessment, and the election for a tax year can be made or amended until 12 months after that year's 31 January filing date: 31 January 2028 for 2025/26, 31 January 2029 for 2026/27 — the last date for a designation at 12% — and 31 January 2030 for 2027/28 at 15% (RDRM73320). Separately, when a former remittance-basis user disposes, on or after 6 April 2025, of a foreign asset held personally on 5 April 2017, its cost is rebased automatically to the 5 April 2017 market value unless they elect out for that disposal — provided the remittance basis was claimed for at least one tax year from 2017-18 to 2024-25, they were never UK domiciled or deemed domiciled before 2025-26, and the asset was not situated in the UK between 6 March 2024 and 5 April 2025 (Schedule 11 to Finance Act 2025). Finance Act 2026 rewrote the designation machinery with retrospective effect. The access conditions and the tracing rules sit in remittance basis after 6 April 2025; the designation itself is worked through in TRF designation mechanics. One feature of that machinery changes the arithmetic of the computation: Finance Act 2026 introduced the term remittance provision and requires the return to state, for each designated amount, whether it is designated on that basis; where an amount is qualifying overseas capital on two bases at once, the full set of reliefs needs two designations, one on that basis and one outside it. Schedule 10 has no rule netting the two designations against each other, and the charge attaches to each designated amount (paragraphs 1(8) and 9(1)), so the charge must be calculated on each designated amount, which need not be the same on both grounds; the amendments are retrospective (paragraph 18(1) of Schedule 3 to Finance Act 2026) and reach returns already filed for 2025-26.

What is in scope

Foreign income covers overseas employment income, foreign dividends, interest, royalties, rental profits and most pensions. Foreign gains cover disposals of non-UK assets, with extra rules under the offshore fund regime. Cryptoassets are usually held as personal investments, and HMRC treats individuals as paying CGT on disposals (CRYPTO20050). A foreign bank, broker, company or trustee will rarely produce UK-ready figures, so the raw data still has to be rebuilt in UK concepts.

The Self Assessment architecture

The classification test

The analysis asks: is the person UK resident for the tax year; is the item income or capital; is it UK source or foreign source; is the asset UK situs or foreign situs; is a special code applicable; has foreign tax been paid; and is a relief claimed. Crypto adds situs questions because HMRC's CRYPTO22600 links exchange-token location to beneficial-owner residence for CGT.

Consequences

Foreign income and gains can be taxable even when nothing is brought to the UK. Foreign tax may reduce the UK bill through foreign tax credit relief, but the credit is never automatic and cannot exceed the UK tax on the same item. Currency conversion, mismatched foreign tax years, pooled crypto costs, fund equalisation, excess reportable income and withholding tax all shift the computation, and a non-reporting fund can turn what looks like a gain into income taxed at higher rates.

Examples

A UK resident founder selling shares in a non-UK company may have a UK CGT event even if proceeds stay offshore. A UK resident investor in an Irish ETF may need reporting-fund and excess-reportable-income analysis. A crypto investor who never cashes out to GBP can still have taxable disposals through swaps, sales or spending.

Evidence

Evidence includes annual account statements, dividend vouchers, withholding certificates, sale confirmations, acquisition-cost files, exchange-rate methodology, crypto transaction exports, rental accounts, pension statements and foreign tax assessments. The file should let the UK computation be rebuilt from source documents and reconcile with bank KYC and source-of-funds records. It also has to stand up against HMRC's CRS and FATCA data, which already shows the department most offshore accounts before any return is filed.

Planning

Planning is classification before the event: is the receipt employment, investment, trust, company or fund income; is a disposal within CGT or the offshore income gains regime; is the four-year FIG regime available; and can foreign taxes be credited here. The most valuable work usually happens before UK residence begins, when fund status, cost basis, embedded gains, crypto records and the timing of foreign tax can still be arranged.

Rates and foreign tax credit relief

Since 30 October 2024 the main CGT rates are 18% within the basic rate band and 24% for higher and additional rate taxpayers, with an annual exempt amount of £3,000 for 2026/27.

Since Finance Act 2026 the income tax rates split by class, and for foreign dividends, interest and rents that now means three separate scales. From the tax year 2026-27 the dividend ordinary rate is 10.75% and the dividend upper rate 35.75% (section 4); the dividend additional rate is unchanged, so the increase reaches two of the three rates. From 2027-28 there are savings rates of 22%, 42% and 47% (section 5) and a separate class of rates for property income: sections 6 and 7 insert ss 6D, 11CA and 16A into ITA 2007 and set the property basic, higher and additional rates at 22%, 42% and 47%. The property figures are fixed by statute for 2027-28 only — s 6D defines them as the rates determined as such by Parliament for the tax year — so later years are not yet set.

Scotland and Wales are a separate question: section 8 and Schedule 2 hand the property rates to the Scottish Parliament and the Senedd; the section was not in force at Royal Assent, and Treasury regulations (SI 2026/1023) brought it into force on 16 September 2026 with effect for 2027-28 and later years. The thresholds are frozen alongside: section 10 extends the freeze on the basic rate limit (£37,700) and the personal allowance (£12,570) through 2028-29, 2029-30 and 2030-31, so growth in sterling terms raises the effective rate on its own.

Foreign tax credit relief under a double tax treaty reduces the UK charge by the tax paid abroad, but never beyond the UK tax on the same item. Fund status sets the rate: a reporting fund gives a CGT disposal, a non-reporting fund gives an offshore income gain charged to income tax. The new rate classes do not reach it. Under regulation 18(3) of the Offshore Funds (Tax) Regulations 2009 the gain is charged under Chapter 8 of Part 5 ITTOIA 2005 as income not otherwise charged, so it runs on the main rates: the top 45% stays where it is even once savings and property income move to 47%, and the gap against CGT holds in its present shape. Finance Act 2026 touched the attribution routes rather than the rate — s 52 removed the special attribution of such gains from regulations 20 and 21, covering non-resident settlements and the transfer of assets abroad, with effect from 6 April 2025, and s 53 preserves the former effect for matchings from earlier years.

Carried interest runs on its own scale. Under s 23I ITTOIA 2005, inserted by section 58 of Finance Act 2026, the recipient is treated as carrying on a trade and the profits of that trade are the sum of the non-qualifying profits and 72.5% of the qualifying profits; the charge runs as trading income with national insurance contributions on top. The rules have effect for the tax year 2026-27 and subsequent years, in relation to investment management services whenever performed.

Evolution: automatic exchange and cryptoassets

HMRC's visibility keeps widening. CRS and FATCA already deliver data on UK residents' offshore accounts automatically, and from 1 January 2026 the Cryptoasset Reporting Framework (CARF) is added: UK crypto service providers collect customer and transaction data, with first reporting and cross-border exchange falling in 2027. The UK dates sit in a statutory instrument — the Reporting Cryptoasset Service Providers (Due Diligence and Reporting Requirements) Regulations 2025, SI 2025/744, made on 24 June 2025 and in force from 1 January 2026. A provider reports to HMRC by 31 May following the calendar year, so the first report falls due on 31 May 2027 for 2026 (reg. 6), and the provider must notify the user that the data goes to HMRC and may be passed to another jurisdiction's competent authority (reg. 8). The EU timetable matches: DAC8 applies from 1 January 2026, with the first exchange between member states by 30 September 2027. The exchange mechanism and the contents of the file are set out in CARF in practice. For CGT, HMRC links the situs of an exchange token to the residence of the beneficial owner (CRYPTO22600), so moving to the UK moves the tax connection of the tokens with it. Foreign income returns are now reconciled against this external data.