A ‘double tax’ warning has been issued to millions of UK households just days before the January 31 self-assessment tax deadline from HMRC.
If you’re not careful, you could end up being taxed twice. Now taxpayers are being urged to take action to ensure they don’t overpay or miss out on vital tax relief for the tax year 2023-24, which must be filed with HMRC this week.
The issue relates to foreign income, such as earnings, investments or pensions, which may be subject to taxation both in the UK and abroad in its country of origin.
To reduce this, the UK has double taxation agreements in place with many other countries, offering a way for taxpayers to claim relief and reduce their tax liability.
Andy Wood, an International Tax Consultant at Tax Natives, highlights the complexities of the situation. He said: “Getting taxed twice on income from abroad can be confusing and expensive.
“With the self-assessment deadline just around the corner, it’s really important to tackle any potential double taxation issues now. If you wait too long, you could end up with a bigger tax bill than necessary.
“HMRC has some helpful guidance on double taxation, especially for people dealing with foreign income for the first time.
“That said, the process of claiming relief – whether through Foreign Tax Credit Relief or double-taxation agreements – can still feel overwhelming. Getting advice from a tax expert can make sure you don’t miss any steps, especially when dealing with international tax laws.”
HMRC issues guidance on its website for those who may be taxed twice. It says: “If you’re taxed twice, you may be taxed on your foreign income by the UK and by the country where your income is from.
“You can usually claim tax relief to get some or all of this tax back. How you claim depends on whether your foreign income has already been taxed.”
What you need to do depends on if you’ve already paid the tax or not. If you haven’t et paid it, you can obtain a form from your foreign country and then submit it to HMRC. If you have, you can include it on your self-assessment tax return, which needs to be submitted by midnight this Friday.
But if you miss the deadline, you could face a £100 fine and a 7.25% penalty on any outstanding money.
Mr Wood warns: “Missing the January 31 deadline can lead to fines and extra headaches.
“For anyone with foreign income, a late filing could mean paying too much tax or struggling to reclaim what you’re owed. It’s best to get your tax return sorted now to avoid penalties and make sure everything’s accurate.
“Double-taxation agreements are there to simplify things, but they’re not always straightforward.
“The terms vary depending on the country, and the amount of relief you can claim depends on those agreements. That’s why getting proper advice is so important – it can save you a lot of stress and money in the long run.”
