Tax Return Foreign Income Question

pennypincher3562

I am just thinking why can't I just lump it in with my UK income? At the end of the day it means I am going to get taxed on it!

londoninvestor

pennypincher3562 wrote: »

The closest one would appear to be option 6, but I reckon I've not paid tax to the US government due to the W8-BEN?

Are you sure you haven't paid the reduced 15% rate as masonic suggests though?

pennypincher3562

londoninvestor wrote: »

Are you sure you haven't paid the reduced 15% rate as masonic suggests though?

Just checked the tax details provided by the US company that paid me, and they are saying that the 'applicable withholding rate' for tax in my case, as they have a W8-BEN on file is 0%.

Excerpted tax advice for UK residents:

'The amount of exemption you can claim depends on the tax treaty your country has with the US. If you’re based in the UK the withholding rate is 0%, so you can claim full exemption. (In this case, you then declare the foreign income on your UK personal or company tax return and pay tax on it in the UK.)'

masonic

pennypincher3562 wrote: »

I am just thinking why can't I just lump it in with my UK income? At the end of the day it means I am going to get taxed on it!

In some cases this is preferred by HMRC rather than adding an additional section to the return. That's why I mentioned checking the notes.

Providing you are declaring the income and you are consistent in the way you do so, it is unlikely to be of any consequence. There is always scope to explain what you have done in the notes section.

londoninvestor

Also, bear in mind that for employment income that has been taxed abroad, you always need to put the income received in the Employment / Self-Employment / Partnership section - just like you would for UK income.

Employment-related entries in the foreign section are in addition to that - not instead of it - and are primarily to claim relief for any double taxation.

[NB that's different to foreign interest or dividends. In that case you put the amount either in the foreign section, or (if it's small enough according to HMRC's guidelines) in the UK section - not in both.]

So I agree that as no foreign tax has been paid, you're fine to put it only in the same sections that UK employment income would go in.