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Posted Wed, 31 Jul 2024 06:25:07 GMT by subtax
I live in UK and work from here for UK company. I used to send money to India from UK in my NRE account. I have earned around 800 pound interest in NRE account in last UK financial year. Do I need to pay tax in UK for this amount in case i want to bring the money back to UK now or paying tax is required only when interest income is beyond 1000 pound in an year? If i need to pay tax in UK, then could you please share the process how can i pay tax for this in UK? Also, NRE interest is not taxable in india. But while paying UK tax for this interest, can i still apply 15 percent credit as per DTAA agreement?
Posted Mon, 05 Aug 2024 10:23:43 GMT by HMRC Admin 32 Response
Hi,
Although NRE interest income is not taxable in India NRE interest income has often been mistaken as non-taxable in the UK this is incorrect, UK tax residents are subject to UK taxation on their worldwide income and gains subject to any remittance basis claims. 
Under the UK-India Double Tax Convention, NRE account interest taxable in the UK can receive credit for Indian tax even if this has not been paid as the credit relief amount is calculated through the tax spared mechanism, which deems Indian tax to have been paid at the marginal rates applicable there. (UK-India DTC notes page HMRC’s Double Taxation Relief Manual DT9553). 
Under the UK-India Double Tax Convention, NRE account interest taxable in the UK can receive credit not exceeding 15% for Indian tax even if this has not been paid. 
UK tax relief not exceeding 15% is available for ten years from the opening date of the NRE account per Article 24(5) UK-India Double Tax Convention. 
NRE interest income should be declared within an in individuals UK self-assessment return. 
Thank you.

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