Do I have to complete a tax return?
Some migrants and international students working in the UK will have to complete a formal tax return each year. In this section we explain what a tax return is and whether you must complete one.
What is a tax return?
In the UK some people have to complete a tax return each year. This is a form in which you declare your income and capital gains for a tax year. You can also use the form to claim tax allowances and reliefs. You send the form to HM Revenue & Customs (HMRC) either on paper or online. The information on the tax return is used to calculate your tax liability. Because you have the legal responsibility for declaring your taxable income, submitting a tax return is called Self Assessment. If you complete a tax return, it is a ‘return’ of all of your taxable income for the year, not just the sources which HMRC has information about already from the payer (such as employment income).
However, most people in the UK pay all their tax ‘at source’, for example, through Pay As You Earn (PAYE) if they are employed, and as such are not required to file a tax return. However, where your tax affairs are complicated you have to complete a formal tax return. Receiving foreign income and gains can make them complicated.
Do I have to complete a tax return?
If you have only UK-sourced income and that income has tax deducted at source, then you probably do not need to complete a tax return, regardless of your residence or domicile status. Please note that all self-employed people in the UK, even those who pay tax at source under the Construction Industry Scheme (CIS), have to complete a tax return – unless the trading income is exempt under the trading allowance.
Alternatively, you may have some bank or building society interest. Since 6 April 2016, this does not have tax deducted at source, but if it is less than your personal savings allowance, you do not need to complete a tax return. If your bank interest exceeds your personal savings allowance, you may be able to avoid filing a tax return by asking HMRC to collect the tax due under PAYE.
People who have UK-sourced income that has not been taxed at source, or not taxed at the correct rate, and on which tax is due, may be required to complete a tax return. Such income would include, for example, rental income, income from investments or perhaps employment income that has not been taxed correctly under PAYE.
There is a tool to help you decide if you need to fill in a Self Assessment tax return on GOV.UK. If you complete the tool and the advice given is that you are not required to file a tax return, we recommend that you take a screenshot or print the page for your records.
There is also information about who has to complete a tax return in our tax basics section.
The onus in the UK is on you, the taxpayer, to tell HMRC if you need to complete a tax return. You must register for a tax return by 5 October following the end of the tax year in question, otherwise you could incur a penalty.
Foreign income earned while non-resident is not in scope of UK tax and does not need to be reported on a UK tax return. Therefore, having foreign income will not trigger a filing requirement if you are non-resident. However, non-residents may be required to file a tax return in the UK for other reasons.
If you are UK resident and you have some foreign income and foreign gains but can benefit from the rules which exclude them from UK tax if certain conditions are met, you probably do not need to complete a tax return. For example, if you do not need to pay any tax on your foreign income because the remittance basis applies automatically and none of that income is remitted to the UK, you will not be required to complete a tax return just to declare that point. However, if you need to make a claim to the remittance basis (as opposed to the case where it applies automatically), then you will need to submit a tax return in order to make that claim.
In any other situation you will normally have to complete a UK Self Assessment tax return and tell HMRC about your foreign income and gains. This is the case even if they have already been taxed in your home country, though double taxation relief may apply. You may have to provide HMRC with a lot of information.
As above, the onus in the UK is on you, the taxpayer, to tell HMRC if you need to complete a tax return. You must register for a tax return by 5 October following the end of the tax year in question, otherwise you could incur a penalty.
You will probably need to do this via form SA1. You can find out more on GOV.UK.
Upon registration you will receive a Unique Taxpayer Reference (UTR), which you should keep safe and confidential. You will need this when completing your tax return.
⚠️ If you are receiving foreign income and are really unsure as to whether or not you need to complete a tax return, you should seek help from HMRC Residency, or a professional tax adviser. You can find contact details for HMRC Residency on GOV.UK. We tell you how you can find a tax adviser in our Getting Help section.
What do I need to do?
If you do need to complete a tax return, be aware that it is a legal document and you are obliged to take reasonable care in completing it. It is a full reconciliation of taxable income and it is important not to leave out any sources of income – no matter how small (unless less than £1) or whether tax has been deducted at source.
In order to complete the Self Assessment return accurately you may have to do some or all of the following things:
- tell (notify) HMRC that you have a tax liability for a particular tax year by 5 October after the end of the tax year;
- establish your residence position for the tax year concerned, which will involve following the rules of the Statutory Residence Test;
- establish your domicile position;
- if you are non-domiciled, decide whether or not the remittance basis applies automatically with regards to your foreign income/gains and if not, whether you wish to claim it;
- if claiming the remittance basis, consider whether any double taxation agreement provides for a re-instatement of UK personal tax allowances;
- if you are filing on the arising basis, get details of your worldwide income and gains;
- find the appropriate exchange rates for the foreign income or gains in order to convert to £ sterling. You can find exchange rates on GOV.UK;
- consider whether any double taxation agreement provides for an exemption from UK taxation for any relevant foreign income source or, failing that, provides a credit for overseas taxes paid;
- if there is no double taxation agreement consider whether there is unilateral relief in the UK for overseas taxes paid.
If you do need to file a tax return, we strongly recommend that you should seek help from HMRC and/or a professional tax adviser. We tell you how you can find a professional tax adviser in our Getting Help section.