Foreign income of Non domiciled resident

I have moved to UK from India in July 2016. I am employed with NHS in UK and my only UK income is from NHS. I have not filed self assessment tax returns in any of the years till FY 2021-22. I have interest income and rental income from properties in India. As it was below 2000 pounds in each of the year, I had not filed self assessment tax returns in any of the years since I moved to UK. I was advised that till 6th year, you will be taxed on foreign income only if you bring it into UK. Also, that if it is below 2000 pounds, you do not have to declare it in UK tax returns. Was my understanding right? Now that, I am in my 7th year as a Non domiciled Resident, I will have to elect arising basis in my self assessment tax return and declare my foreign income in total and pay tax on it subject to tax relief uner Double Tax Avoidance agreement. ( I understand, that if I want to elect to be taxed on remittance basis, I will have to pay 30000 pounds). My questions: 1) Should I have filed my self assessment tax returns in UK in any of the first 6 years if in one of the years my foreign income was 2010 pounds as against the exempted 2000 pounds. If so, how do I correct this? In calculating this 2000 pounds, should I take into account only those foreign income that are to be taxed in UK as per the Double tax avoidance agreement or the entire foreign income, for eg, Rental income in India which is as per DTAA, taxable only in India. 2) I have paid Indian tax on my rental income and interest. My Indian accountant says that the rental income of properties situated in India is taxed only in India. Do I still have to show this in my self assessment tax return? If show, how do I claim the credit of taxes that I paid in India if I file a self assessment tax return opting for Arising basis from FY 22-23 ( my 7th year of Non dom status). 3) Some of my friends say, that I should have filed a self assessment tax return from my 1st year of coming into UK as I had foreign income even though if it is less than 2000. Please comment Kindly help

Hi,
 

Yes.  You should have completed tax returns every tax year, because you were in receipt of overseas property income (no matter how much) in addition to using the remittance basis.  When you use the remittance basis, you lose your personal allowance and will only be taxed on your UK income and any remitted income.  As you know after being resident for 7 of the last 9 years, there is then a remittance charge of £30000, which is added to your UK income and any remitted income, to work out your liability .  The remittance charge goes up to £60000 if resident in the UK for 12 of the last 14 years . You may wish to make a voluntary disclosure to HMRC, whcih can be done via this link: How to make a voluntary disclosure to HMRC .  Please note that you cannot make voluntary disclosures for tax year where a tax return has been issued .  For those tax years, you must submit the tax returns . Thank you

Thank you for the clarification. From your reply, I understand that I should have filed self assessment tax returns from the first year in which I became a tax resident in UK. In that event, is it sufficient, if I opt for Remittance basis while filing the tax return or do I have to declare all my foreign income in the tax return? Also, do I have to forego all of my personal tax allowance or only the equivalent of my foreign income? for eg: My personal tax allowance is £ 12,570/-. However, my foreign income is only £ 2000 pounds. If that be the case, do I have to forego all of my personal tax allowance of £ 12,570 or only the equivalent of £ 2000 which is my foreign income? Please help

Hi siddharth Lokanathan,
You can choose which years you want to use the remittance basis and which you don't.
In any tax year that you claim remittance basis, you automatically lose all of your personal allowance £12570.  
Instead all of your UK income and any remitted income is taxed, with the unremitted income not being taxed, until a tax year in which it is remitted to the UK.  
You need to weigh up both methods to determine if the remittance basis is worth claiming, as you could end up paying more UK tax using the remittance basis
than if you used the arising basis and declared the foreign income.
Thank you.