Foreign Income and Gains Form SA106 - 2023
Updated: Nov 15
In the United Kingdom, all individuals with foreign income or gains are required to report these on their Self-Assessment tax return. The Foreign (Form SA106) is a crucial part of this process. Updated for the 2023 tax year, this form allows you to declare foreign income and pay the required tax.
What is Form SA106?
Form SA106 is a UK Self-Assessment tax return form used for reporting foreign income and gains. The form is used by individuals who have earned income from sources outside of the UK, such as rental income from overseas properties, dividends from foreign companies, or income from overseas pensions. Form SA106 includes various sections to cover a wide array of income types, ensuring a comprehensive declaration of foreign income.
Who Should File Form SA106?
Anyone with income from a source outside of the UK should consider filing Form SA106. This includes UK residents with income from foreign rental properties, overseas pensions, foreign dividends, and interest from foreign savings. Non-residents who have UK income that's been taxed at source may also need to complete the form. However, not all foreign income needs to be reported. There are specific exemptions and allowances that can reduce or even eliminate the need to declare certain types of income, so it's essential to understand these rules before completing the form.
In the UK, Form SA106 (Foreign) is used to record income and gains from overseas and claim Foreign Tax Credit Relief if applicable. It should be filled out by UK residents who:
Have foreign income such as earnings from employment, self-employment, rental income, savings, investments, or pensions.
Have paid foreign tax on income and want to claim Foreign Tax Credit Relief.
Have received income from a person abroad or are chargeable on a benefit received by them, a close family member, or are the recipient of an onward gift that is matched to protected foreign source income.
Have gains from the disposal of holdings in offshore funds or discretionary income from non-resident trusts.
Have gains from foreign life insurance policies, capital redemption policies, and life annuity contracts.
How to Complete Form SA106
Form SA106 is designed to be straightforward and easy to complete. There are clear instructions provided on the form, and it's divided into various sections based on the type of income.
1. Income from overseas property: This section is for declaring income from rental properties located outside of the UK. You'll need to include details about the property, such as location and rental income.
2. Foreign dividends and interest: Here, you declare any dividends or interest received from foreign sources.
3. Overseas pensions, annuities, and social security income: This is for declaring income from foreign pensions and other similar sources.
4. Capital Gains and Losses: If you sold assets overseas and made a profit or loss, this section is where you report those figures.
A Comprehensive Guide to Filling Out Form SA106 (2023) UK
Form SA106 is a crucial document for UK taxpayers with foreign income. This guide will help you understand how to fill out the different sections of the form accurately and efficiently.
Section 1: Unremittable Income
If you were unable to transfer any of your overseas income to the UK, you should mark an 'X' in the box provided. Any additional details should be provided in the 'Any other information' box on your tax return or on a separate sheet.
Section 2: Foreign Tax Credit Relief
If foreign tax was deducted from your foreign income, you might be eligible to claim Foreign Tax Credit Relief. To do this, you should read the 'Foreign notes' to understand if you can claim the relief and how to do so. If you're calculating your tax bill, you may also want to calculate your Foreign Tax Credit Relief. If you do, use the Working Sheet provided with Helpsheet 263, 'Relief for Foreign Tax paid' and fill in box 2.
Section 3: Filling in the 'Foreign' Pages
The 'Foreign notes' explain how to give details of your foreign income and gains on these pages. The form is divided into several pages, each covering different aspects of foreign income:
Page F1 covers unremittable income and the claim to Foreign Tax Credit Relief.
Pages F2 and F3 are for foreign savings income such as interest, dividends, pensions, and social security benefits.
Pages F4 and F5 are for foreign property income.
Page F6 is for claiming Foreign Tax Credit Relief on income and capital gains included elsewhere on your tax return, and for entering other overseas income, gains from offshore funds, and gains on foreign life insurance policies.
Section 4: Income from Overseas Sources
If you have income from overseas savings, foreign dividends, remitted foreign savings or dividend income, overseas pensions or benefits, or income, dividends received by an overseas trust, company, or another person abroad, fill in the columns on these 2 pages. Use a separate row for each source of income or country and check the relevant Double Taxation Treaty for any limits to the relief you can claim.
Section 5: Income from Land and Property Abroad
If you have income from furnished holiday accommodation in a European Economic Area (EEA) country, please enter the details on page UKP 1 of the 'UK property' pages, not on the 'Foreign' pages. If you only have one overseas let property, or you have more than one but they're all in the same country, you can just complete these pages. Fill in a single summary section for all the properties.
Section 6: Other Overseas Income and Gains
If you're claiming Foreign Tax Credit Relief on income included elsewhere in your tax return, fill in the columns below and say in the 'Any other information' box (on page TR 7) where on your tax return this income is included.
Filling out Form SA106 can be a complex process, but with careful attention to the instructions and a clear understanding of your foreign income, you can complete it accurately. Remember to read the 'Foreign notes' and other helpsheets provided by HMRC to ensure you're claiming all the reliefs you're entitled to.
How to Fill Different Sections of the SA106 Form Question/Box Wise
The SA106 form is used for reporting foreign income and gains in the UK tax system for the tax year 6 April 2022 to 5 April 2023. Below is a guide on how to complete each section, with suggested answers for each question or fill-in-the-blank.
Unremittable Income (Box 1)
If you were unable to transfer any of your overseas income to the UK, put ‘X’ in the box and provide details in the ‘Any other information’ box on your tax return or on a separate sheet.
Foreign Tax Credit Relief (Box 2)
If you’re calculating your tax, enter the total Foreign Tax Credit Relief on your income. Use the Working Sheet provided with Helpsheet 263 ‘Relief for Foreign Tax paid’.
Income from Overseas Sources (Boxes A, B, C)
For each source of income (e.g., interest, dividends, pensions) from overseas, provide the country or territory code (Box A), the amount of income before tax (Box B), and the foreign tax taken off or paid (Box C).
Interest and Other Income from Overseas Savings
Report the interest and other income from overseas savings, including the amount of income and foreign tax paid.
Dividends from Foreign Companies
State the amount of dividends you received from foreign companies and the foreign tax paid on these dividends.
Remitted Foreign Income
If you have remitted foreign savings or dividend income to the UK, report the amount and the foreign tax paid.
Overseas Pensions, Social Security Benefits, and Royalties
Enter the amounts of any overseas pensions, social security benefits, and royalties you received, along with the foreign tax paid.
Income Received by a Person Abroad
Report all other income received by a person abroad and any remitted ‘ring fenced’ foreign income, along with the foreign tax paid.
Income from Land and Property Abroad (Box 14)
Report the total rents and other receipts from overseas properties, excluding taxable premiums for the grant of a lease.
Allowable Property Expenses (Box 17)
Enter the total amount of allowable property expenses, such as rent, repairs, legal fees, and cost of services provided.
Net Profit or Loss from Overseas Property (Box 18)
Calculate your net profit or loss by adding total rents and premiums paid (if any) and subtracting allowable property expenses.
Private Use Adjustment (Box 19)
Make any necessary adjustments for private use of the property, which would affect the income reported.
Capital Allowances for Equipment and Vehicles (Box 21)
Enter any capital allowances claimed for equipment and vehicles used in relation to your overseas property income.
Costs of Replacing Domestic Items (Box 23)
State the costs associated with replacing domestic items for residential lettings only.
Adjusted Profit or Loss for the Year (Box 24)
Calculate your adjusted profit or loss by taking into account all incomes, expenses, and allowances.
Foreign Tax Paid on Employment, Self-Employment, and Other Income
If you are claiming Foreign Tax Credit Relief on income included elsewhere in your tax return, provide details of the country or territory code and the foreign tax paid.
Capital Gains – Foreign Tax Credit Relief and Special Withholding Tax
Report any chargeable gains under UK rules and foreign tax rules, and claim Foreign Tax Credit Relief or Special Withholding Tax if applicable.
Gains on Disposals of Holdings in Offshore Funds
Enter the amount of gain or payment from disposals of holdings in offshore funds and from non-resident trusts.
Gains from Foreign Life Insurance Policies
State the amount of gain from foreign life insurance policies, capital redemption policies, and life annuity contracts.
Benefit from a Person Abroad (Box 42)
If you received a benefit from a person abroad or are chargeable on a benefit, enter the value of the payment.
Ensure you consult the 'Foreign notes' for more detailed guidance or seek professional advice if you are unsure how to fill in any part of the SA106 form. Accurate and complete reporting is essential to comply with UK tax laws.
How to Submit SA106 in the UK?
Form SA106 is a supplementary form that is submitted along with your main Self-Assessment tax return. Here are the steps to submit it in the UK:
Download the Form: You can download the SA106 form from the official UK government website. Make sure you have the correct version for the tax year you are filing for.
Fill in the Form: Fill in the form according to the instructions provided. Make sure you provide all the necessary information about your foreign income and gains.
Attach to Your Tax Return: Once you have filled in the SA106 form, you need to attach it to your main Self-Assessment tax return. This can be done by including it with your paper tax return or by filling in the equivalent sections if you're filing online.
Submit Your Tax Return: Submit your tax return, including the SA106 form, to HMRC. If you're filing a paper tax return, the deadline is usually 31st October following the end of the tax year. If you're filing online, the deadline is 31st January following the end of the tax year.
Keep Copies: It's a good idea to keep copies of all your tax documents, including your SA106 form, for your records.
Remember, if you're unsure about how to fill in the form or submit it, it's always a good idea to seek advice from a tax professional or contact HMRC directly.
Can I Submit SA106 Online?
Yes, you can submit Form SA106 online as part of your Self-Assessment tax return. When you fill out your tax return online, the system will guide you to fill out additional sections based on the type of income you declare. If you indicate that you have foreign income, the system will prompt you to fill out the equivalent sections of the SA106 form.
Here are the steps to do it:
Register for Self-Assessment: If you haven't already, you'll need to register for Self-Assessment on the UK government's website.
Sign in to Your Account: Once you're registered, sign in to your Self-Assessment online account.
Start Your Tax Return: Start filling out your tax return. As you go through the process, the system will ask you about different types of income.
Declare Your Foreign Income: When you get to the section about foreign income, declare any income you've received from outside the UK. This includes earnings from employment, self-employment, rental income, savings, investments, or pensions.
Fill Out the SA106 Sections: The system will guide you to fill out the equivalent sections of the SA106 form based on the foreign income you declare.
Review and Submit: Once you've filled out all the necessary sections, review your tax return to make sure everything is correct, and then submit it.
The 2023 Update: What's New?
The 2023 version of Form SA106 has been updated to ensure it remains current and effective for tax reporting. While the overall structure and purpose of the form remain consistent with previous versions, it's always important to read any new instructions or guidelines provided with the form to stay abreast of any changes.
What is The Foreign Worker's Exemption in the UK 2023?
The Foreign Workers' Exemption in the UK for 2023 has the following requirements:
Your income from your overseas job must be less than £10,000.
Your other foreign income (such as bank interest) must be less than £100.
All your foreign income must have been subject to foreign tax, even if you did not have to pay (for example, because of a tax-free allowance).
Your combined UK and foreign income must be within the band for basic rate Income Tax.
You do not need to fill in a tax return for any other reason.
To claim the foreign worker's exemption, you need to complete SA106 (foreign) and SA109 (Residence), along with SA100 (tax return) and any other relevant supplementary pages.
The combined income refers to gross income. For instance, if your UK gross income is £53,000 and you use 25% of it (i.e., £13,250) to contribute to your pension, and your foreign income is £10,000, you would still qualify for the foreign workers’ exemption. This is because paying into a pension extends the basic rate band beyond the standard rate.
How Can A Tax Accountant Help You With Reporting Foreign Income and Gains in Self-Assessment Tax Return?
When it comes to dealing with tax complexities, a professional tax accountant can be invaluable, especially in the context of reporting foreign income and gains in a self-assessment tax return. As globalisation increases and more people generate income or own assets across international borders, understanding the tax implications becomes crucial.
Why Foreign Income Matters
Foreign income refers to income earned outside of your home country. This can come from various sources like employment, a business, or rental properties overseas. If you are a resident of a country that operates on a worldwide income tax system, you are obligated to report and pay taxes on your global income.
Likewise, foreign gains pertain to capital gains made from selling overseas assets such as shares, property, or other investments. The tax rules and rates applied to these gains vary based on the specifics of your situation and the rules of your country of residence.
The Complexity of International Tax Laws
Tax laws vary dramatically from one country to another. Each jurisdiction may have different laws about what constitutes taxable income, tax rates, deductions, exemptions, and how foreign income and gains are handled. These variations create a complex maze of regulations that can be challenging for individuals to navigate without professional help.
The Role of a Tax Accountant
Tax accountants specialise in understanding and applying tax laws. They can assist with preparing and filing tax returns, providing advice on tax planning strategies, and resolving tax-related issues. In the context of foreign income and gains, their expertise becomes even more critical. Here are a few ways a tax accountant can assist:
Tax accountants have the knowledge and experience to ensure that all foreign income and gains are correctly reported on your tax return. They can determine what needs to be declared, calculate the correct amounts, and complete the necessary paperwork. This can help you avoid errors that could lead to penalties or audits.
Double Taxation Avoidance
One of the challenges of dealing with foreign income and gains is the risk of double taxation. This occurs when the same income is taxed in two different countries. Most countries have treaties or domestic laws to prevent this, but understanding and applying these rules can be complicated. Tax accountants can guide you on how to claim relief under these treaties or laws to avoid or mitigate double taxation.
Compliance with Tax Laws
Tax laws change frequently, and staying updated is a taxing task in itself. A professional tax accountant can help you remain compliant with these changes, especially those related to foreign income and gains. They can provide advice on new regulations, how they affect you, and what steps you should take in response.
Tax Planning Strategies
Tax accountants can also help with tax planning strategies to minimise your overall tax liability. For instance, they can advise on timing the sale of foreign assets to reduce capital gains tax or using foreign tax credits effectively. This proactive approach to managing your taxes can lead to significant savings over time.
Navigating the complexities of reporting foreign income and gains in a self-assessment tax return can be challenging. However, a tax accountant can provide invaluable assistance in ensuring accurate reporting, avoiding double taxation, keeping up with changing tax laws and devising effective tax planning strategies. The peace of mind that comes with knowing your international tax affairs are in order is, in itself, a valuable benefit.
Completing Form SA106 and correctly reporting foreign income and gains is a crucial aspect of tax compliance for UK residents with overseas income. Understanding the form and how to fill it out accurately is essential to avoid any potential issues with HM Revenue & Customs (HMRC). As always, when dealing with complex financial and tax matters, consider seeking professional advice to ensure that you're meeting all your obligations.
20 Most Important FAQs about A106 Form
1. Q: Is the SA106 form required for temporary UK residents?
A: Temporary UK residents with foreign income may need to file the SA106, depending on their residency status and the amount of foreign income.
2. Q: How do I report foreign rental income if I have several properties in different countries?
A: You should report the income from each property separately in the overseas property section of the form.
3. Q: Can I claim tax relief on foreign losses with the SA106 form?
A: Yes, you can claim relief for foreign losses, but specific rules apply. You should provide details of these losses in the relevant section of the form.
4. Q: Do I need to convert foreign income into GBP for the SA106 form?
A: Yes, all foreign income and gains should be converted into British pounds (GBP) for reporting on the SA106 form.
5. Q: What exchange rate should I use for converting foreign income?
A: Use the exchange rate that was applicable at the time the income was received or at the time of the transaction for capital gains.
6. Q: How do I report income from a foreign trust on the SA106 form?
A: Income from foreign trusts should be reported in the relevant section, including details of the trust and the income received.
7. Q: What if I am taxed in a foreign country on the same income?
A: You can claim Foreign Tax Credit Relief to avoid double taxation. Provide details of the foreign tax paid in the relevant section.
8. Q: Can I file the SA106 form separately from my main tax return?
A: No, the SA106 form is a supplementary form and must be submitted along with your main Self Assessment tax return.
9. Q: How do I report a foreign pension lump sum payment on the SA106 form?
A: Report lump sum payments in the overseas pensions section, including the amount and any foreign tax paid.
10. Q: Are there any special considerations for reporting foreign dividends?
A: Yes, foreign dividends may have different tax treatments depending on the country of origin. Include details in the foreign dividends section.
11. Q: What should I do if I receive income from an offshore fund?
A: Report income from offshore funds in the capital gains section, specifying the type of fund and the income or gains received.
12. Q: How do I report foreign employment income on the SA106 form?
A: Foreign employment income should be reported in the employment section, including the country of origin and any foreign tax paid.
13. Q: What if I have foreign income that doesn’t fit any specific category on the form?
A: Use the ‘Other overseas income and gains’ section to report any foreign income that doesn't fit into the other specified categories.
14. Q: Can I use the SA106 form to report income from a business operated abroad?
A: Yes, report this income in the self-employment section, detailing the nature of the business and the income earned.
15. Q: How do I report income from overseas investments on the SA106?
A: Report overseas investment income in the savings and investment section, including details of the investments and income received.
16. Q: What if I’m a non-resident with UK income? Do I need to fill out the SA106?
A: Non-residents with UK income may need to complete the SA106, depending on their income sources and tax status.
17. Q: How do I report capital gains from selling foreign property?
A: Report these gains in the capital gains section, including details of the property and the gain or loss realized.
18. Q: Are there any special instructions for reporting income from a foreign country with which the UK has a double taxation agreement?
A: Yes, ensure you are aware of the terms of the double taxation agreement as they may affect how you report and tax this income.
19. Q: Can I deduct foreign tax paid from my UK tax liability on the SA106 form?
A: Yes, foreign tax paid can often be credited against your UK tax liability, but specific rules apply, and limits may exist.
20. Q: How do I handle foreign income received in a currency that’s not widely traded?
A: Convert the income into a major currency first (like USD or EUR) and then into GBP, using the exchange rate at the time of each conversion.
It's always advisable to seek professional tax advice if you have complex foreign income situations or are unsure about any aspect of completing the SA106 form.