The short version: A Double Taxation Agreement (DTA) is a deal between two countries that stops you getting taxed twice on the same income. The UK has agreements with lots of countries to prevent this.
How does it work if you’re a UK resident?
If you’re UK resident, HMRC taxes your worldwide income. That includes money you earn abroad. Without a DTA, you could end up paying tax in both countries on the same earnings.
With a DTA in place, you can usually claim tax relief in the UK for tax you’ve already paid overseas. You still need to report the foreign income on your UK tax return, but you won’t pay tax on it twice.
What if you’re not a UK resident?
If you live abroad but earn money from the UK, you’ll need to file a UK tax return for that income. A DTA means you can often claim back the UK tax in your country of residence, or vice versa.
Do all countries have agreements?
No. The UK has DTAs with most major economies, but not every country. If there’s no agreement, you might genuinely have to pay tax in both places. Check gov.uk for the current list of countries with agreements.
Earning income from overseas and not sure how it affects your UK tax? Get in touch and we’ll help you figure it out.
