A non resident pays UK income tax only on income from UK sources, such as UK rent, pay for work done in the UK, UK trading profits and UK pensions. UK savings interest, UK dividends, the State Pension and some benefits are “disregarded income”, and section 811 of the Income Tax Act 2007 caps the total bill at the tax deducted from that income plus the tax on everything else worked out without a personal allowance.

Which UK income is taxed when you live abroad?

GOV.UK’s starting point is that you usually have to pay tax on your UK income even if you are not UK resident, and that non residents do not pay UK tax on foreign income. In practice the main charges are on:

  • UK employment income. For a year in which you are non resident, general earnings are taxable only so far as they relate to duties performed in the UK (section 27 ITEPA 2003). If you live abroad and work in the UK, your tax is based on the days you work here.
  • UK property income. Rent from UK property is taxable wherever you live, usually through the Non Resident Landlord Scheme.
  • UK trading income. If you work for yourself in the UK, you normally need to file a return.
  • UK pensions. Workplace and personal pensions paid from the UK are taxable unless a double taxation agreement gives them to your country of residence. Most UK government pensions, such as civil service pensions, are taxed only in the UK.

Some UK income is free of UK tax for non residents altogether. Interest on UK government securities issued as FOTRA (“free of tax to residents abroad”) gilts is not taxable for a non resident, and HMRC’s R43 notes confirm you are not normally liable on interest, dividends or other annual payments from sources outside the UK.

What counts as disregarded income?

Section 813 ITA 2007 defines disregarded income. The main categories are:

  • disregarded savings and investment income (section 825): dividends from UK resident companies, and UK interest, purchased life annuity payments, profits on deeply discounted securities and transactions in deposits, provided they are not relevant foreign income;
  • disregarded pension income: UK social security pensions, including the State Pension, and a few annuities, but not ordinary registered pension scheme income (only retirement annuity contracts that existed before 6 April 2006 qualify);
  • disregarded social security income: taxable benefits listed in Table A of section 660 ITEPA 2003, other than income support and jobseeker’s allowance;
  • disregarded annual payments and disregarded transaction income.

Income is not disregarded if you have a UK representative in relation to it (section 813(2)). Rent, UK employment income, UK trading profits and most private and workplace pensions are never disregarded.

How does the limit on liability work?

Section 811 ITA 2007 limits a non resident individual’s income tax for a year to the total of two amounts:

  • Amount A: the tax deducted from, or treated as deducted from, the disregarded income;
  • Amount B: the tax that would be due if the disregarded income were left out, and if any personal allowance, blind person’s allowance or married couple’s allowance you get only because of your nationality, other status under section 56(3), or a double taxation agreement were also left out.

Because the section limits liability, you pay the lower of the normal calculation and A plus B. UK banks pay interest without deducting tax, and UK dividends carry no deducted tax, so Amount A is often nil. The limit therefore helps most where disregarded income is large compared with the other UK income. Where your UK income is mostly rent or pension, the normal calculation with a personal allowance is usually lower. See personal allowance for non residents for who gets that allowance.

A worked example

Illustration only, using 2026 to 2027 rates for England. Sam is a British citizen living in Portugal and is non resident. His UK income is rental profit of £8,000 and UK bank interest of £40,000, paid without tax deducted.

Step Normal calculation Section 811 limit
Income counted £48,000 £8,000 rent only
Personal allowance £12,570 None
Rent taxed Nil (covered by allowance) £8,000 at 20% = £1,600
Interest taxed £35,430, less £5,000 starting rate and £1,000 savings allowance, leaves £29,430 at 20% = £5,886 Not counted
Tax deducted at source (Amount A) n/a Nil
Total £5,886 £1,600

Sam’s liability is limited to £1,600. If his interest had been £3,000, the normal calculation would have been far lower than tax on his rent with no allowance, and the limit would not help.

How is UK rental income collected?

If you live abroad for six months or more a year, HMRC treats you as a non resident landlord. Your letting agent, or your tenant if there is no agent and the rent is more than £100 a week, deducts basic rate tax from the rent after allowing for expenses it pays, and gives you a certificate of tax deducted at the end of the year. You can apply on form NRL1i to receive rent without deduction and pay through Self Assessment instead; HMRC will refuse if your tax affairs are not up to date. Either way, you normally declare the income on the property pages (SA105) and residence pages (SA109) unless HMRC tells you not to. More detail is in the Non Resident Landlord Scheme.

When do you need to file a return?

GOV.UK says you usually need a Self Assessment return if you live abroad and you let UK property, work for yourself in the UK, have taxable UK savings interest, have a pension outside the UK and were UK resident in one of the five previous tax years, or have any other untaxed UK income. You do not need to report income on which you have already claimed relief under a double taxation agreement.

Non residents cannot use HMRC’s own online return. You either file on paper with form SA109, use commercial software that supports the residence pages, or use an agent. The paper deadline is 31 October after the tax year, earlier than the online deadline (see Self Assessment deadlines and penalties). If you are not in Self Assessment and have overpaid, for example because tax was taken off income covered by your allowance, you can claim on form R43, but HMRC says you must use Self Assessment instead if you have UK rental income over £2,500 or trading income.

Does a double taxation agreement change the answer?

The country where you live may also tax your UK income. Under a double taxation agreement you can apply for UK relief either before tax is taken (for example, to have a UK pension paid without UK tax) or as a refund afterwards. GOV.UK lists country specific claim forms for residents of countries such as Australia, Canada, France, Germany, Ireland, Spain and Switzerland. Treaties do not remove UK tax on gains from selling UK residential property.

What about capital gains?

Non residents do not usually pay UK capital gains tax, but there are exceptions: gains on UK property, assets used in a UK branch of a foreign business, and gains caught when you return within five years of leaving. See non resident capital gains tax on UK property and temporary non residence.

What are the common mistakes?

  • Assuming the State Pension is always ignored. It is disregarded income, so it drops out only where the section 811 limit gives the lower figure; otherwise it uses up personal allowance in the normal calculation.
  • Claiming the personal allowance and the section 811 limit together. The limit is worked out without the allowance.
  • Treating UK workplace pensions as disregarded. Only UK social security pensions and a narrow group of older annuities are.
  • Filing late on paper because the 31 January online date was assumed to apply.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.