What is foreign income for UK tax purposes?
Answered 17 March 2026
What is Foreign Income for UK Tax Purposes?
"Foreign income" is not a single monolithic concept in UK tax law — it operates differently depending on the context (e.g. individuals vs. companies, remittance basis, double tax relief). The primary statutory definition for individuals is "relevant foreign income" under ITTOIA 2005 s.830, supplemented by the broader "foreign income and gains" concept in ITA 2007 s.809Z7 for remittance basis purposes.
What the Law Says
1. "Relevant Foreign Income" — ITTOIA 2005 s.830
The core statutory definition is found in s.830 ITTOIA 2005. "Relevant foreign income" means income which:
- (a) arises from a source outside the United Kingdom, and
- (b) is chargeable under any of the provisions specified in s.830(2)
The specified charging provisions cover a wide range of income types, including:
- Trade profits (Chapter 2, Part 2 ITTOIA)
- Profits of an overseas property business (Chapter 3, Part 3 ITTOIA)
- Interest (Chapter 2, Part 4 ITTOIA)
- Dividends from non-UK resident companies (Chapter 4, Part 4 ITTOIA)
- Purchased life annuity payments (Chapter 7, Part 4 ITTOIA)
- Profits from deeply discounted securities (Chapter 8, Part 4 ITTOIA)
- Royalties and other income from intellectual property (s.579 ITTOIA)
- Annual payments not otherwise charged (Chapter 7, Part 5 ITTOIA)
- Income not otherwise charged (Chapter 8, Part 5 ITTOIA)
Exclusions: "Relevant foreign income" does not include income chargeable under s.844 (unremittable income after source ceases) or s.517C/517E ITA 2007 (profits on disposals concerned with UK land treated as trading profits).
Extended definition: Certain income is treated as relevant foreign income by other provisions, including:
- A partner's share of a firm's trading income (s.857(3) ITTOIA)
- Foreign pensions and annuities (various ITEPA 2003 provisions)
- Foreign social security benefits (s.679(2) ITEPA 2003)
- Accrued income profits for non-UK domiciles (s.670A ITA 2007)
- Transfer of assets abroad: foreign deemed income (ss.726, 730, 735 ITA 2007)
The statutory definition of "relevant foreign income" in ITA 2007 s.989 cross-refers to ITTOIA 2005 s.830(1)–(3), and also includes income treated as relevant foreign income by the provisions listed in s.830(4).
2. "Foreign Income and Gains" — ITA 2007 s.809Z7 (Remittance Basis)
For remittance basis purposes, an individual's "foreign income and gains" for a tax year are defined more broadly as:
- (a) the individual's relevant foreign earnings for that year
- (b) the individual's foreign specific employment income for that year
- (c) the individual's relevant foreign income for that year (as defined in ITTOIA s.830)
- (d) the individual's foreign chargeable gains for that year
Relevant foreign earnings means:
- If the individual does not meet the requirement of ITEPA 2003 s.26A: their chargeable overseas earnings
- Otherwise: their general earnings within ITEPA 2003 s.26(1) (non-UK earnings)
Foreign chargeable gains are the chargeable gains accruing on the disposal of foreign assets (within the meaning of Schedule 1 to TCGA 1992).
3. "Foreign Tax" — TIOPA 2010 s.259B (Hybrid Mismatch / Double Tax Relief Context)
In the context of double tax relief and hybrid mismatch rules, "foreign tax" is defined as a tax chargeable on income under the law of a territory outside the UK that corresponds to the UK charge to income tax or the UK charge to corporation tax on income.
4. Qualifying Foreign Income — ITTOIA 2005 s.845H (FIG Regime, from 6 April 2025)
From 6 April 2025, under the new Foreign Income and Gains (FIG) regime for qualifying new residents, "qualifying foreign income" includes:
- Profits of a trade carried on wholly outside the UK
- A UK resident partner's share of profits of a trade carried on by the firm wholly outside the UK
- Profits of an overseas property business
- Interest (e.g. on a foreign bank account)
- Dividends from non-UK resident companies
HMRC Guidance / Practice
Remittance Basis (historical context)
HMRC guidance confirms that the remittance basis applied to both foreign income and foreign capital gains for non-UK domiciled individuals. From 6 April 2017, the remittance basis did not apply to foreign income or gains of individuals deemed domiciled in the UK. From 6 April 2025, it is no longer possible to use the remittance basis of taxation.
Mixed Funds
HMRC guidance on mixed funds identifies the following categories of foreign income for ordering purposes:
- Relevant foreign earnings (not subject to foreign tax)
- Foreign specific employment income
- Relevant foreign income (not subject to foreign tax)
- Foreign chargeable gains
- Employment income, relevant foreign earnings, relevant foreign income, and foreign chargeable gains subject to a foreign tax (treated as separate categories)
The legislative definitions of these categories are found in ITA 2007 s.809Z7, and "relevant foreign income" is defined in ITTOIA 2005 s.830.
What "Foreign Tax" Is Not
HMRC guidance clarifies that:
- Sales or turnover taxes are not foreign taxes corresponding to UK income tax or corporation tax on income
- US State taxes are not "foreign tax" within the hybrid mismatch rules because they are not imposed at national level
- A tax paid by a parent company on income arising to its subsidiary is not a "foreign tax" for Part 6A TIOPA purposes (per Finance Act 2021 amendment)
Summary: For UK income tax purposes, "foreign income" is principally defined as "relevant foreign income" under ITTOIA 2005 s.830 — income arising from a source outside the UK and chargeable under one of the specified provisions. For remittance basis purposes (up to 2024–25), the broader concept of "foreign income and gains" in ITA 2007 s.809Z7 also encompasses relevant foreign earnings, foreign specific employment income, and foreign chargeable gains.
Citation sources
Section 845H ITTOIA 2005 Individuals who are ‘qualifying new residents’ (see RFIG44000) will not be able to claim relief under the FIG regime for all types of foreign income, only ‘qualifying foreign income’. The types of income that are qualifying foreign income are set out below, and are broadly similar to the types of income that could be taxed on the remittance basis, but there are some differences. Income is qualifying foreign income if it falls within a description set out at section 845H
Part 8 Foreign income: special rules Chapter 1 Introduction Meaning of “relevant foreign income” 830 1 In this Act “ relevant foreign income ” means income which— a arises from a source outside the United Kingdom, and b is chargeable under any of the provisions specified in subsection (2) (or would be so chargeable if section 832 did not apply to it). 2 The provisions are— a Chapter 2 of Part 2 (trade profits), b Chapter 17 of Part 2 (adjustment income), c Chapter 3 of Part 3 (profits of propert
S259B TIOPA 2010 defines tax for the purposes of Part 6A as income tax the charge to corporation tax on income diverted profits tax the CFC charge foreign tax or a foreign CFC charge The definition of tax does not include any tax on capital gains in the UK, whether CGT or corporation tax on capital gains any other UK capital taxes Foreign tax is defined as a tax chargeable on income under the law of a territory outside the UK that corresponds to the UK charge to income tax or the UK charge to co
Part 14 Income tax liability: miscellaneous rules Chapter A1 Remittance basis Interpretation of Chapter Meaning of “foreign income and gains” etc 809Z7 1 This section applies for the purposes of this Chapter. 2 An individual's “ foreign income and gains ” for a tax year are— a the individual's relevant foreign earnings for that year, b the individual's foreign specific employment income for that year, c the individual's relevant foreign income for that year, and d ... the individual's foreign ch
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