Wrongly being taxed for foregin interest income less than £2k on HMRC's Self Assesment portal

I am non-domiciled residents of the UK with foreign interest income less than £2,000 in the tax year. As I understand the above stated criteria means this is not taxed in UK ,but I need to fill SA online using HMRC SA portal and followed the steps: 1) In Tailor your return Page 1> If you received any foreign income, do you need to complete the foreign section? Selected NO 2) Tailor your return Page 2 > Did you receive any interest, for example, from UK banks, UK building societies, UK unit trusts (or untaxed foreign interest up to £2,000)? Selected YES 3) UK interest >Change UK interest > Untaxed foreign interest (up to £2,000) - amounts which have not had tax taken off. Enter total amount: After puting my foreign interest income of £1600 , I can see this has been added to total income and taxed Why is this happening , I shouldnt be taxed on my £1600 foreign interest ? What should I do?

Hi

If you have not remitted it to the UK, you don't report it. See guidance at Paying tax on the remittance basis (Self Assessment helpsheet HS264)

Thank you

@HMRC Admin 5 that is only if you pay on remmitance basis isnt it ?Instead using paying on interest gained each year even though not remitting any money back to UK. In that case Answer my orginal question "I am non-domiciled residents of the UK with foreign interest income less than £2,000 in the tax year. As I understand the above stated criteria means this is not taxed in UK ,but I need to fill SA online using HMRC SA portal and followed the steps: 1) In Tailor your return Page 1> If you received any foreign income, do you need to complete the foreign section? Selected NO 2) Tailor your return Page 2 > Did you receive any interest, for example, from UK banks, UK building societies, UK unit trusts (or untaxed foreign interest up to £2,000)? Selected YES 3) UK interest >Change UK interest > Untaxed foreign interest (up to £2,000) - amounts which have not had tax taken off. Enter total amount: After puting my foreign interest income of £1600 , I can see this has been added to total income and taxed Why is this happening , I shouldnt be taxed on my £1600 foreign interest ? What should I do?"

Hi
If you are claiming the remittance basis, you only report foreign income that has in fact been remitted to the UK. In your case, it hasnt so your answer to the foreign interedt would be 0.

I am opting on arisal basis not remittance basis as mentioned in the original question , Please answer my orginal question based on that "I am non-domiciled residents of the UK with foreign interest income less than £2,000 in the tax year. As I understand the above stated criteria means this is not taxed in UK ,but I need to fill SA online using HMRC SA portal and followed the steps: 1) In Tailor your return Page 1> If you received any foreign income, do you need to complete the foreign section? Selected NO 2) Tailor your return Page 2 > Did you receive any interest, for example, from UK banks, UK building societies, UK unit trusts (or untaxed foreign interest up to £2,000)? Selected YES 3) UK interest >Change UK interest > Untaxed foreign interest (up to £2,000) - amounts which have not had tax taken off. Enter total amount: After puting my foreign interest income of £1600 , I can see this has been added to total income and taxed Why is this happening , I shouldnt be taxed on my £1600 foreign interest ? What should I do?"

Hi,

If opting for the arising basis, you are taxed on your worldwide income whether remited or not. The foreign interest is correctly included as taxable income. This is then covered by your personal savings allowance so further down the calculation you will see that the tax rate applied to this income is 0%.

Thank you.

@HMRC Admin 19 that is the issue I am seeing on self assesment portal , final calculation is taxing my less than £2k intrest income when choosing arisal basis. Can you please tell me why & how to rectify this? Is this an issue with Self assesment portal that by default it assumes all intrests is taxable ? Even though it is for non-domiciled residents of the UK with foreign interest income less than £2,000 in the tax year

Hi londa123,
If opting for the arising basis you are liable on your worldwide income so all income is taxable.
The interest rate will be applied further down the calculation to show that the first £2000 is taxed at 0%
Thank you. 
 

Hello HMRC Team. I have similar case to one described in original message of this thread and I am also confused with the fact that final calculation for Self Assessment treats foreign income less than £2,000 as taxable amount. My foreign income is less then £2,000, I am resident, non-domiciled. I am referring to https://www.gov.uk/tax-foreign-income/non-domiciled-residents, which states: "Tax if you’re non-domiciled You do not pay UK tax on your foreign income or gains if both the following apply: -they’re less than £2,000 in the tax year -you do not bring them into the UK, for example by transferring them to a UK bank account If this applies to you, you do not need to do anything. If your income is £2,000 or more You must report foreign income or gains of £2,000 or more, or any money that you bring to the UK, in a Self Assessment tax return. You can either: - pay UK tax on them - you may be able to claim it back - claim the ‘remittance basis’ " My interpretation is: if I am non-domiciled and my foreign income is less than £2,000 in the tax year and it's not remitted to the UK, I can declare nothing about foreign income in Self Assessment tax return and no tax should be payed for this foreign income regardless of the fact whether I have any related allowances applicable (like personal savings allowance) even if I am using arising basis? Am I correct here? If so, should I in Self Assessment: 1) In Tailor your return Page 1's "If you received any foreign income, do you need to complete the foreign section?" select "NO"? 2) In Tailor your return Page 2's "Did you receive any interest, for example, from UK banks, UK building societies, UK unit trusts (or untaxed foreign interest up to £2,000)?" select "NO" (since as per https://www.gov.uk/tax-foreign-income/non-domiciled-residents and conclusion above non-domicile residents should report nothing in this case)? 3) Have no "UK interest" section since answer to previous question is "NO"? Thank you!

Hi 
Unfortunately, we are unable to provide specific advice tailored to your individual circumstances on this forum.
If you need further help with your self-assessment tax return you can find further information at:
Self Assessment: general enquiries
Alternatively you may wish to engage the services of a professional advisor/accountant to assist with your enquiry 
Thank you