Self-Employed outside the UK

Hi HMRC team, Hope all is good! I live in UK, I'm UK tax resident. At the same time I'm doing business (Sole Trader) outside the UK. My business nature are mobile apps. We import & export digital services (only to B2B counterparts and all of them non-UK). The turnover last tax year was higher than £85k. My questions are: 1) When doing self-assessment, should I declare this as Self-Employed OR foreign income? 2) Do I need to register for VAT or pay VAT? (considering it's B2B services all outside the UK). 3) Should I pay tax on NET PROFIT (which was left on bank account after all expenses on the last day of tax year, namely 5th April. Overall left balance) Many thanks

Hi ,
 

When completing your self assessment tax return, you will need to use SA103F.  You should add your foreign income (after converting to sterling) to your self employment gross profit (it's still part of your self employment business) as well as the expenses.  If you paid overseas tax then you also need to declare the overseas gross income and tax paid on SA106.  You can claim a credit for the overseas tax paid. Yes, you will need to register for VAT : Register for VAT  .   This would depend on what your accounting period is . Thank you .

Thanks for your reply! As for VAT: I understand that need to register for VAT, but what about VAT tax payment in my case? (B2B services, import & export towards non-UK companies). I mean based on the rule "place of supply" the exported services may be not subject to VAT, while importing services may be subject to Reverse VAT. As for accounting period: for the Sole Trader business entity in that country I have it - it's regular calendar year. However in UK it's 5-6 April, so I believe that NET profit left on 5th april should be declared as NET PROFIT for self assessement? Many thanks

Hi,

If you are in the UK and supplying digital services to other businesses and these businesses are all outside the UK then these supplies would be outside the scope of VAT and there would be no obligation to register for VAT.

You can register for VAT in the UK voluntarily however.

You can see guidance here:

Working out whether you need to register

The place of supply of digital services

For Self Assessment, yes, it must be for the UK tax year. you will also need to amend your accounting period going forward for Making Tax Digital. You can see guidance here:

Making Tax Digital for Income Tax

Thank you.

Hi HMRC, I have a similar scenario but my foreign income is from a partnership in business (association of partners, not a limited company), will it be treated similarly as self-employed using SA103F or differently? Also, in the other country, the tax is paid by the partnership firm but no further tax liabilty on the individual unless tax band changes due to income level. Can I claim the tax relief against the overseas tax paid (pro-rated to my share) by the firm? Will there be any tax relief since both the countries have a Double Tax Agreement? Many thanks

Hi HMRC, I have posted my query on 9th Sep but after browsing the forum further, I realize I need to be more specific in my query, so updating the query as follows: I live in the UK, domiciled here and full time employed in the UK. Back in Pakistan, I have a partnership/share in a firm (Association of Persons). The income from partnership is taxed in Pakistan. The tax paid by the firm is treated as tax paid by the partner and there is no further tax liability unless tax band changes due to some other income. In addition I have some rental income from some property I had before moving to the UK. I am expecting my foreign income to be little over £2000. I understand now that all that income is taxable in the UK and need to be reported. How to report that foreign income in my Self Assessment? Will it be considered as Self-employed income? What about the tax paid in Pakistan while UK has a Double Taxation Agreement with the UK, how much tax relief in this scenrio I am eligible for? Furthermore, I am shareholder and Director of small business (Ltd company) in the UK dealing in software/web hosting etc. This business incurred loss and no salary or dividend from this business. I am mainly confused about the income from partnership (my share) and the rental income and its treatment under DTA. Any guidance will be much apprecitaed.

Hi,
Please refer to guidance at:
Tax on foreign income
Thank you.

Thanks for the guidance. I have gone through the guidance 'Tax on Foreign Income', SA106 notes etc but couldn't find the treatment for income from partnership firm, both in the SA-100 and for claiming its tax relief. WIll it be treated similar to Dividend or differently? Thanks

Hi,
You would decare income from a foreign partnership on page F6 of SA106, in the section named "Foreign tax paid on employment, self-employment and other income". You can see information here: 
Foreign (2024)
Foreign notes (2023-24)
Thank you.
 

It's important to declare your income accurately when filing your self-assessment, so you should classify it as self-employed income. Regarding VAT, since your services are B2B and outside the UK, you may not need to register, but it's best to consult HMRC guidelines for specifics.