The self-assessment deadline can be a very stressful period for many, and it can also be complicated if you have multiple different incomes – particularly for those who also have income from abroad
HMRC has issued a warning as some people could be at risk of paying double tax ahead of the self-assessment deadline this month.
Millions of Brits will be scrambling to meet this year’s self-assessment deadline on January 31 over the course of this month. This can be a very stressful period for many, and it can also be complicated if you have multiple different incomes, particularly for those who also have income from abroad.
The tax office has released a video to provide advice for individuals who are looking to submit their returns. Some could be taxed both in the UK and abroad – so could be “double taxed”. In the two-minute video, HMRC explained that foreign income is anything earned outside of England, Wales, and Northern Ireland. This can be anything, such as wages for work outside the UK, income from foreign investments, rental income from overseas properties, and pensions held outside the UK.
Those with any foreign income need to tell HMRC through self-assssment through the foreign income section. You will need to do this even if you’ve paid tax on it abroad. However, the video explained that if you have already paid tax on it abroad, you may be able to claim some tax relief on it here, meaning you could get some or even all of it back. The video then tells viewers that they should head to GOV.UK and look for the “If you are taxed twice” section for more information.
The government website explains that those who are at risk of being double-taxed can apply for “tax relief” in the country their income is from if the income is exempt from foreign tax but is taxed in the UK – one example of this is pensions – or required by that country’s double-taxation agreement.
If you have not paid tax on the income, the website says you will need to ask the foreign tax authority for a form if you want to apply for tax relief. Before you apply, you must prove you’re eligible for tax relief by either:
- Completing the form and sending it to HM Revenue and Customs (HMRC) – they’ll confirm whether you’re a resident and send the form back to you
- Including a UK certificate of residence, if you’re applying by letter
Once you’ve got proof, send the form or letter to the foreign tax authority. For those who have already paid tax on their income abroad, HMRC advises: “You can usually claim Foreign Tax Credit Relief when you report your overseas income in your tax return.
“How much relief you get depends on the UK’s ‘double-taxation agreement’ with the country your income’s from. You usually still get relief even if there is not an agreement, unless the foreign tax does not correspond to UK Income Tax or Capital Gains Tax. You may not get back the full amount of foreign tax you paid. You get back less if either, a smaller amount is set by the country’s double-taxation agreement, or, the income would have been taxed at a lower rate in the UK.”
