Tax on foreign bank interest

flamingolegs

Hi there
I am a UK resident again from 2020 after moving back from Australia. I have funds still in oz which learns interest. I complete an australia tax return every year and pay my taxes.
Do I need to do a tax return in UK.  I earn roughly £6000 in interest a year or less
Thank you

DRS1

There used to be a principle that if you were UK resident but not UK domiciled then the remittance basis would apply so if you had foreign income which you did not bring to the UK then you did not pay UK tax on it.  I think they may have fiddled with domicile rules in recent years but I still see remittance basis on the SA form so maybe it still applies.

Of course if you are UK domiciled as well as resident you pay UK tax on your worldwide income.  You may get relief for any foreign tax paid.

Presumably there is a reason you are still doing Australian tax returns.

ob1kinobi

I am a UK born Australian citizen living in UK after repatriation in 2020. If you have an Australian Tax File No. (TFN) and are paying tax in both Australia and UK I would have thought there would be sharing of data through the Double Tax Treaty that both countries work with. I know that it has a compensating effect on Gap years for NICs so that you are not paying top rates twice. If you haven't already explored that double tax treaty information it may be helpful to seek advice on it, or use an accountant, who knows the subject, to submit a UK tax return on your behalf. My opinion is that you shouldn't pay tax twice, in the case of Australia, because of the bi-national agreement, which is unique to arrangements between the two countries, but you may need to submit documentation regardless.

flamingolegs

Thank you. That is what I thought , I shouldn't be paying it twice. The tax i pay in australia is non residence tax but its still tax so I shouldn't be paying tax on it again in the Uk

wmb194

"Hi there I am a UK resident again from 2020 after moving back from Australia. I have funds still in oz which learns interest. I complete an australia tax return every year and pay my taxes. Do I need to do a tax return in UK. I earn roughly £6000 in interest a year or less Thank you"

flamingolegs said:

Thank you. That is what I thought , I shouldn't be paying it twice. The tax i pay in australia is non residence tax but its still tax so I shouldn't be paying tax on it again in the Uk

If you're tax resident in Britain you'd still declare it in the UK and then request tax relief against the Australian tax using the DTT. It could be that there would be nothing to pay in the UK or there might be - it depends on what rates are allowed in the DTT vs the UK rate of tax.

DRS1

flamingolegs said:

Thank you. That is what I thought , I shouldn't be paying it twice. The tax i pay in australia is non residence tax but its still tax so I shouldn't be paying tax on it again in the Uk

That is not how DTTs work.

You may need to speak to an accountant to see if you should have been doing UK tax returns since 2020.  They may be able to help you with the domicile question if there is any merit in that.

poseidon1

OP ( ie @flamingolegs) has failed to confirm whether  or not they are UK born and therefore maybe taxable worldwide rather than on the old remittance basis for non doms.

If UK born and therefore UK dom, they are ( and always have been) taxable world wide if UK tax resident at the time. In this case they have been back to the UK since 2020.

If UK dom therefore, seems to me @flamingolegs should be self assessing the interest on the foreign income pages of the tax return, claim relevant level of DTA relief, but may still face a net UK liability thereon if subject to higher rates.

However if OP does qualify for non UK dom status ( ie foreign born without a UK domicile of choice/origin), the following article helps explain the regime for such individuals before and after the changes made as of 5 April 2025 - those non doms require specialist advice

https://www.litrg.org.uk/international/uk-tax-uk-residents-foreign-income-and-gains

NorthYorkie

The questioner has said "I am UK resident again" which suggests that he is domiciled in the UK, so the remittance basis does not apply. Under Article 11(2) of the Double Tax Treaty the Australian tax should be limited to 10% (see Synthesised text of the Multilateral Instrument and the 2003 Australia-UK Double Taxation Convention - in force - GOV.UK) and that tax should be credited against the UK tax due on that interest.

poseidon1

If he is indeed UK dom, hopefully he now understands that he does  have UK tax exposure on his Australian bank interest ( with a credit for Australian tax at source).

He seems to labouring  under the misapprehension he has no further UK reporting obligations, and from his last response on this thread, seems to have somehow  taken comfort that he has no further tax to worry about.

Hopefully the last few posts will disabuse him of this notion.