UK tax on dividend income in India which has been already taxed in India.

I am a UK resident but I do not work here and have no income in the UK. My domicile is India. And I have some dividend income from mutual funds in India which are taxed in India and reinvested into the fund and never remitted to UK. I am a taxpayer in India. The income from dividend is around £20K (converted from Indian Rupee). Do I need to pay tax in UK on this dividend income ? Does this not fall under the Doble Taxation Avoidance Agreement (DTAA) ? Please kindly guide me.

Hi,

As a UK resident, you are required to declare your world wide income and capital gain, using the 'arising basis'.  
The income and capital gains is declared in a Self Assessment Tax Return, in the tax year that it arises, even if it is not remitted to the UK. The overseas income and capital gains is declared on a self assessment tax return.  
As you are not domiciled in the UK, you can elect to use the remittance basis, where you claim the remittance basis and declare the income and capital gains that you are not remitting to the UK.  If you remit the income or capital gains in a later tax year, they will be taxable in that later tax year.  
Have a look at the below, as it is not always the best option.  

Residence, domicile and the remittance basis: RDR1

You claim the remittance basis through a self assessment tax return. The rules for the remittance basis will change from 6 April 2025.  
Individuals who opt into the new regime will not pay UK tax on any foreign income and gains arising in their first four years of tax residence, provided they have been non-tax resident for the last 10 years.

Thank you.

Thank you very much for your response and it helped me clarify what path I need to take. May I request some some additional guidance. It seems that I have mistakenly avoided paying the right taxes but I wish to make things right. My stay in UK has always been a constantly wavering decision of should we stay or return back to India because of the ill health of my partner. I had to become carer for my wife for most part. I paid my taxes in UK and India independently. But I admit this was due to lack of awareness and misinformation. I have realized that I will have to choose the arising basis of taxation which will have to be back dated. I have just finished 13 years of being here in March 2024. I came here to seek employment in March 2011. Of these 13 years I have only been able to work only 5 years full-time due to the above mentioned reason. This employment was dotted between these 13years, of and on. I also want to remain true to HMRC and want to be transparent because I have nothing to hide. Please kindly guide me with the following: 1) How many years will I need to back date my returns ? 2) After fulfilling the arising basis tax liabilities do I need to file for relief for double taxation separately ? 3) Will I have to pay additional tax or charge when I finally bring this money to UK from India after paying taxes on arising basis ? 4) Is there an email address where I can start talking to HMRC as I have received a letter from HMRC to declare if I have world wide income. Is it ok to tick that "I have not declared my overseas income and/or gains as they are not liable to UK tax" as that was my supposition because I paid all my taxes in India and UK independently ? And then elaborate in a separate letter ? Please if you can help make the right choice. Thank you so much.

Hi,
HMRC can go back to the previous 6 tax years and on the arising basis, tax your world-wide income.  
As part of your self assessment tax return, you would claim foreign tax credit relief, when declaring your foreign income and tax deducted in each of the tax years.  
You may have tax to pay and their could be late payment penalties and interest as well, but this we cannot be sure of at this time.  
We do not communicate via email on personal matters.  You would need to contact our self assesment helpline on 0300 200 3310 or contact our webchat facility at:
Contact HMRC
You may also wish to consider seeking professional advice from the likes of an accountant specialising in this complicated area.
Thank you.