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Transfer Money From Overseas to UK: Tax Implications

This Sending Money guide will reveal everything you need to know about the tax implications when transferring money to the UK from overseas. Designed to save you money and time, this guide will provide a comprehensive overview of the taxation requirements for this specific international money transfer route. Read on to learn more.

Updated: 28/09/2022
Read time: 5 minutes
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Sending money to the UK

The UK government agency responsible for collecting taxes is Her Majesty’s Revenue and Customs (HMRC). The non-ministerial department of the government was formed on April 18th, 2005, a result of the merger of the Inland Revenue and Her Majesty’s Customs and Excise. The money which HMRC collects funds the UK’s core public services and provides financial support to individuals and families across the country. The department has an annual budget of around $5 billion and the official logo is the St Edward’s Crown. 

Taxation rules for the UK are determined by the following factors: 

  • Size of the transfer 
  • Tax treaties imposed by the sender’s country
  • Whether the recipient is a UK citizen or not
  • How the funds were derived 

To help our readers understand the taxation implications for incoming funds sent to the UK, we will now run through each of these factors in more detail. Think of this as a checklist to reference when evaluating the amount of tax you may have to pay for an international transfer of this type. 

Residency status in the UK 

One of the main factors that determine if you have to pay taxes when sending money to the UK from overseas is residency status. UK residents have to pay taxes from income earned outside of the UK but non-UK residents will not incur taxes in most cases.  

The Statutory Residence Test (SRT) will help you work out your residence status for a tax year, with each individual tax year looked at individually depending on your visa status. If you live in the UK for 183 days of the year,  you will be considered a UK resident without other tests. There are other stipulations regarding UK residency which can be found on the government website. 

Income is taxed in the UK 

If you have deemed a UK resident in the eyes of the government, money sent to the UK that is a form of income will be taxed. However, this is not limited to direct forms of income, such as money received for work done, or any of the following: 

  • Pension
  • Rental income
  • Profit from a business
  • Gains from selling an asset
  • Interest from savings

Tax implications for migrants

A non-domiciled person – someone who lives in the UK but may have permanent residency in another country – can receive tax-free allowances in the following cases:

  • If the foreign investment income is under 100 GBP
  • If foreign income is under 2,000 GBP
  • When employment income is under 10,000 GBP and taxes have been paid in the country funds were received from 

Gift transfers to the UK

You can send money to UK residents without incurring taxes if the funds are a gift, as HMRC does not view gift transfers as a form of income. Complications may arise, however, if the received money earns interest since the gains are taxable. 

It is a good idea to get a UK tax advisor to figure out the legalities of receiving money from abroad especially when large sums of money are being sent across the world. The savings you will make in potential taxes outweighs the cost of a specialist accountant or advisor. 

Summary

The main things to decipher when sending money to the UK are the question of residency, gifting, taxation, and income. Once you have considered these areas you will be in a better position to make the transfer without incurring any unwanted or unexpected expenses. 

While you are visiting our website, we recommend our other useful Sending Money guides: How to Avoid Bank Charges for International Transfers and The Safest Ways to Send Money Online.

Frequently Asked Questions

Can you send money to the UK without paying taxes?
What happens if you do not pay taxes for international transfers?
What steps can I take to avoid tax or legal problems?

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April Summers

April is a trained journalist and the Content Editor for MoneyTransfers.com. She has 10 years experience writing about a diverse range of subjects, from financial services to arts and entertainment. When she’s not writing about global remittances she can be found daydreaming about her next holiday abroad.

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