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Posted Mon, 23 Oct 2023 15:42:38 GMT by
Hello, I got £3700 equivalent amount in foreign currency credited to my foreign bank account towards foreign interest income. None of it was remitted back to the UK. It remains in the foreign bank account. May I take that I still have to pay tax on the entire amount @40% if my total income is above £50700? Or do I pay tax only if I bring the interest income back to the UK? When I enter £3700, does HMRC calculate tax on full £3700 or do I get £2000 tax free allowance and pay @40% on the remaining £1700? Self Assessment calculation tends to calculate it on full £3700; not £1700. Please help clarifying this for me.
Posted Thu, 26 Oct 2023 15:14:10 GMT by HMRC Admin 20
Hi subash krishnawarriar,

If you are UK tax resident and domiciled, you need to report it even if not brought to the UK.
If higher rate, your savings allowance is only £500 and if basic rate it is £1000 and you will be taxed on the difference.
If not  domicilled, please refer toPaying tax on the remittance basis (Self Assessment helpsheet HS264)

Thank you.
 
Posted Thu, 26 Oct 2023 16:26:39 GMT by
Thanks for your reply. My question was about 'foreign interest income', which I am made to believe has £2000 tax free allowance before I pay tax on the interest income above £2000. Are you clarifying that the interest income generated is not relevant, whether it is foreign interest income or UK interest income, the allowance is only £500 or £1000? Where does the £2000 tax free allowance on foreign interest/dividend come in then?
Posted Tue, 31 Oct 2023 14:22:30 GMT by HMRC Admin 8
Hi,
£2000 would refer to dividends, both UK and foreign.  Where the combined dividend exceeds £2000, tax will be payable on the balance over this amount:
Tax on dividends.  
Savings interest may be taxed above £500 or £1000, depending on the level of your income. 
Have a look at:
Tax on savings interest
Thank you

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