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.