Moving to the United Kingdom offers new opportunities for work, family life, education, and business, but it also introduces a tax system that many immigrants find complex and unfamiliar. Understanding how UK tax rules apply to your personal circumstances is essential to remaining compliant and avoiding unexpected liabilities from the outset.
This blog provides a practical overview of UK tax rules for immigrants for the 2025/26 tax year, explaining how tax residence works, when income becomes taxable, and how recent legislative changes affect foreign income and gains. Whether you are a new arrival, a sponsored worker, an international student, or a family member joining a loved one in the UK, having clarity on these rules is crucial for informed financial and immigration planning.
You’ll learn when you need to pay tax, how residence status affects your liability, and what changes from 6 April 2025 mean for your foreign income and gains. The aim is to give you confidence in managing your UK tax affairs without drowning in jargon.
Key UK Tax Rules for New Immigrants
Most immigrants who live or work in the UK must pay UK tax on their UK income from their first day of employment. There is no grace period or waiting time in UK tax rules. If you start a job on Monday, your employer will begin deducting income tax and National Insurance from your very first payslip.
Income tax applies to wages, salaries, and self-employed profits earned in the UK. National Insurance contributions fund state benefits such as the State Pension and are calculated separately. Both obligations typically begin the moment you start earning money in the UK, regardless of your nationality or visa type.
The UK tax year runs from 6 April to 5 April the following year. This article focuses on the 2025/26 tax years, which is particularly important given significant changes in new UK tax rules taking effect from 6 April 2025. Your residence status is the cornerstone of UK taxation. It determines whether you pay UK tax only on UK earnings or on your worldwide income and gains. Broad analysis of UK tax rules is as follows:
- UK residents are usually taxed on income and gains from everywhere in the world
- Non-residents generally pay UK tax only on UK-source income and certain property gains
- Your domicile status historically affected how foreign income was treated, but this is changing from April 2025
- Double taxation agreements with other countries can prevent you being taxed twice on the same money
- Major reforms announced by Chancellor Rachel Reeves abolish the traditional remittance basis regime
Understanding the UK tax rules matters because getting them wrong can lead to unexpected tax bills, penalties, or missed opportunities to claim relief. The sooner you grasp how UK taxation applies to your situation, the better you can plan your finances.
When You are Tax Resident in the UK
UK tax residence is not the same as your immigration status. You can hold a valid UK visa and still be non-resident in tax rules uk, or you can be a UK tax resident without permanent settlement rights. The two systems operate independently under UK tax rules.
Residence is normally decided under the Statutory Residence Test (SRT), which looks at how many days you spend in the UK and your connections or “ties” to the country. If you need to prove your immigration status, Salam Immigration explains the documents, digital tools, and procedures you need to do so confidently. The test is detailed, but the core principles are straightforward:
- Spending 183 days or more in the UK during a tax year automatically makes you UK resident for that year
- Fewer days may still result in residence if you have strong ties to the UK, such as a UK home, family, or full-time work
- You can become resident part way through a tax year and may qualify to “split” the year into UK and overseas periods
- The split-year UK tax rules can limit your tax exposure to only the portion of the year after you arrived
- Non-residents normally pay UK tax only on UK-source income—not on foreign income or foreign gains
For most immigrants relocating for employment, becoming UK resident happens quickly. If you arrive to start a permanent job and plan to stay, you will likely be resident from your arrival date. This means your worldwide income becomes subject to UK tax rules from that point, unless specific reliefs apply.
Income Tax on UK Earnings for Immigrants
Most immigrants who work in the UK pay income tax on their salary, wages, or self-employed profits in exactly the same way as UK citizens. There is no separate tax regime for foreign nationals working here—the same UK tax rules, rates and thresholds apply to everyone.
UK-source income includes employment income from a UK employer, profits from UK self-employment, rental income from UK property, UK pensions, and most UK savings interest. If the source of your earnings is in the UK, you will generally need to pay UK tax on it.
The 2025/26 income tax bands for England, Wales, and Northern Ireland work as per UK tax rules is:
| Band | Taxable income | Rate |
| Personal allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
Key points to note:
- The personal allowance of £12,570 is frozen until April 2028, meaning more people pay tax as wages rise
- If your income exceeds £100,000, your personal allowance is reduced by £1 for every £2 above that threshold
- Scotland has different income tax rates for employment, pension, and property income—immigrants living in Scotland should check the specific Scottish bands
- Marriage allowance may be available if one partner earns below the personal allowance threshold
- Some non-resident nationals from countries without a UK tax treaty may not be eligible for the personal allowance—HMRC guidance confirms who qualifies
The system of UK tax rules is progressive, meaning you pay higher rate tax only on the portion of your earnings above each threshold, not on your entire income.
How Immigrants Pay UK Tax: PAYE, Self Assessment and Codes
Most employees have tax deducted automatically through Pay As You Earn (PAYE). Your employer calculates the correct amount of income tax and National Insurance each pay period and sends it directly to HMRC. Self-employed individuals and those with more complex affairs must complete a self assessment tax return instead.
Here’s how the system works in practice:
- PAYE for employees: Your employer uses a tax code from HMRC to calculate deductions. The code reflects your personal allowance and any adjustments for benefits or additional income
- Starter checklist: When you begin your first UK job, you complete a starter checklist (or provide a P45 from a previous employer) so HMRC can issue the correct tax code
- Emergency tax codes: If HMRC doesn’t have your details, you may be placed on an emergency code that deducts more tax than necessary—this is usually corrected within a few weeks
- Self Assessment registration: You must register if you are self-employed, a company director, or receive significant foreign income that isn’t taxed at source
- Filing deadlines: Online tax returns are due by 31 January following the end of the tax year—for example, 31 January 2027 for the 2025/26 tax year
- Mid-year arrivals: Immigrants who arrive or leave part way through the year may need to complete additional forms or use HMRC’s online services to claim a refund or correct underpaid tax
The practical steps are: register with HMRC if required, file your return on time, pay any tax owed by the deadline, and check your tax code regularly to avoid surprises.
Tax on Foreign Income and Gains for Immigrants
UK tax treatment of foreign income, overseas salary, rental income from property abroad, savings interest, and dividends, depends on whether you are UK resident. The same applies to foreign gains arising from selling assets outside the UK.
Non-residents generally do not pay UK tax on foreign income or capital gains. However, they may still be taxed on gains from UK land and property, even if they live overseas.
Residents face a different position under UK tax rules. They are usually taxed on worldwide income and gains, including money kept in overseas bank accounts, profits from renting out a house abroad, and proceeds from selling foreign shares or property. The tax applies whether or not you bring the money into the UK.
Historically, the distinction between domicile and residence mattered greatly. Individuals who were resident but not domiciled in the UK could use the remittance basis to avoid UK tax on foreign income and gains until they were remitted to the UK. This regime in UK tax rules is being abolished from 6 April 2025.
From that date, new arrivals who qualify will instead access a “foreign income and gains” (FIG) relief, providing 100% exemption on such income for up to four tax years. To be eligible, you must have been non-UK resident for the previous ten consecutive tax years.
For those who used the remittance basis before 6 April 2025, transitional rules apply. The Temporary Repatriation Facility allows former remittance basis users to bring previously untaxed offshore income and gains into the UK at reduced rates—12% for amounts designated in 2025/26 and 2026/27, rising to 15% in 2027/28.
Large disposals of overseas assets may trigger capital gains tax if you are UK resident. For example, selling a flat in Mumbai or shares in a US company could create a taxable gain. The annual exempt amount for capital gains is currently £3,000 for 2024/25, meaning gains above this limit are taxable at rates of up to 24% as per UK tax rules depending on the asset type.
If you are not UK resident
Non-residents enjoy a simpler tax position for foreign income. You usually pay UK tax only on UK-source income and certain gains from UK property.
- Foreign salary, overseas savings interest, and gains on foreign shares are normally outside the UK tax scope for non-residents
- Dividends from companies based abroad and rental profits from overseas property are similarly excluded
- You may still need to file a UK return if you have UK rental income, run a UK business, or sell UK land or property
- As an example, a postgraduate student spending fewer than 90 days in the UK each year with a remote job paid by an Australian employer would likely owe no UK tax on that foreign income
The contrast with UK residents is significant. If you remain non-resident, you avoid UK tax rules on most overseas income entirely.
If you are UK resident
UK-resident immigrants are subject to UK tax rules on worldwide income and gains from the date they become resident. This applies regardless of where the income arises or whether it remains overseas.
Practical implications include:
- Interest from a bank account in Germany, rental income from a flat in India, and dividends from US shares are all potentially taxable in the UK
- Selling a property or investment portfolio abroad may create a chargeable gain subject to UK capital gains tax
- Employment income from working overseas (even for a few days) may need to be reported on your UK tax return
- The post-April 2025 FIG regime offers relief for new arrivals who meet the ten-year non-residence test, but this is time-limited to four years
- Immigrants who arrived before 6 April 2025 under the old remittance basis rules face different transitional provisions
If your situation involves significant offshore assets or income streams from more than one country, professional advice is advisable. The UK tax rules interact with local tax law in your home country, and mistakes can be costly.
National Insurance for Immigrants
National Insurance contributions fund UK state benefits, including the State Pension, and are calculated separately from income tax in UK tax rules. Most immigrants who work in the UK must pay NICs alongside their income tax.
Employees pay Class 1 NICs, while self-employed individuals pay Class 2 and Class 4 contributions. The amount you pay depends on your earnings:
| Contribution type | Who pays | 2025/26 rate |
| Employee Class 1 | Employees earning above primary threshold | 8% (plus 2% above upper limit) |
| Employer Class 1 | Employers on earnings above secondary threshold | Around 15% |
| Self-employed Class 2 | Self-employed above small profits threshold | Flat weekly rate |
| Self-employed Class 4 | Self-employed on profits above threshold | 6% (plus 2% above upper profits limit) |
Key points for immigrants:
- You usually need a UK National Insurance number to work legally, claim benefits, or build State Pension entitlement for UK tax rules
- Apply for a National Insurance number through the DWP if you don’t already have one—this is separate from your visa application
- NICs are deducted automatically through PAYE for employees
- Self-employed individuals pay NICs through their assessment tax return
Under social security agreements with EU countries and certain treaty countries, some immigrants may remain covered by their home country’s system and be temporarily exempt from UK tax rules & NICs.
When immigrants may not need to pay National Insurance
Some immigrants seconded to the UK by a foreign employer remain insured under their home country’s social security system. This avoids paying contributions in both countries.
- An A1 certificate (for EU/EEA nationals under the Trade and Cooperation Agreement) or a Certificate of Coverage from treaty countries proves exemption from UK NICs
- The exemption typically lasts for an initial period—often 52 weeks for EU nationals, though extensions are possible
- Conditions depend on bilateral agreements between the UK and your home country
- If you’re unsure whether you qualify, check with HMRC or your home social security authority before starting work
Claiming the wrong exemption or failing to apply for one when eligible can create problems later, so it’s worth confirming your position early in UK tax rules.
Double Taxation and Tax Treaties
Immigrants often worry about being taxed twice on the same income—once in the UK and once in their home country. This is a legitimate concern, particularly for those who remain tax resident in more than one country during a transition year.
The UK tax rules has double taxation agreements with over 130 countries. These treaties are designed to prevent the same income or gain being taxed in both jurisdictions. The usual mechanisms for relief are:
- Exemption method: One country agrees not to tax certain income types, leaving taxation to the other country alone
- Credit method: You pay tax in both countries but claim a credit for foreign tax paid against your UK liability, or vice versa
- Reduced rates: Some treaties cap withholding tax rates on interest, dividends, and royalties crossing borders
Income types commonly covered by UK tax rules treaties include:
- Employment income (especially relevant for cross-border workers)
- Pensions paid from overseas
- Savings interest from foreign banks
- Dividends from foreign investment income
- Royalties from intellectual property
Example: An engineer from Germany takes a job in London but remains tax resident in Germany for the first three months of the tax year. Her UK employment income is taxable in the UK, but she can claim relief in Germany under the UK-Germany treaty to avoid double taxation on that portion.
Immigrants who remain tax resident in their home country for part of a year may need to file returns in both places and claim treaty relief accordingly. Keep detailed records of travel dates and any foreign tax paid.
Refunds, Overpayments and Common Immigrant Tax Issues
New arrivals and people leaving the UK often pay the wrong amount of tax in their first or last tax year. This happens more frequently than you might expect.
Common causes of overpayment include:
- Emergency tax codes applied when HMRC lacks your details
- Being taxed as a full-year resident when split-year treatment should apply
- Having multiple jobs in one tax year with incorrect code allocations
- Employers not applying personal allowances correctly from the start
How to claim a refund according to the UK tax rules:
- Update your details with HMRC via your Personal Tax Account to correct your tax code mid-year
- File a Self Assessment return if you have complex income or need to claim split-year treatment
- Use specific HMRC forms for people leaving the UK (Form P85) or claiming back overpaid tax (Form R38)
- Keep all documentation: payslips, P60s, P45s, and evidence of any foreign tax paid
Foreign nationals on short-term assignments may reclaim overpaid UK tax once they return home. This requires careful record-keeping of travel dates, UK workdays, and earnings.
A practical checklist on UK tax rules for immigrants:
- Collect and store all UK payslips and tax documents
- Note your arrival and departure dates precisely
- Keep proof of foreign tax paid for treaty relief claims
- Check your tax code each time you change jobs
- Register for Self Assessment if your situation requires it
Compliance, HMRC Checks and When to Seek Advice
HMRC has extensive powers and international data-sharing agreements to identify undeclared foreign income and gains. The Common Reporting Standard means information about offshore bank accounts flows automatically between tax authorities in over 100 countries.
If you have overseas accounts, investments, or income sources, make sure you understand UK tax rules and disclose all taxable income through Self Assessment. Failing to do so can result in penalties, interest charges, and in serious cases, criminal prosecution.
Key compliance points:
- HMRC can contact taxpayers about undisclosed offshore income at any time
- Formal disclosure facilities exist for those who want to come forward voluntarily, often with reduced penalties
- Late or incomplete declarations attract higher penalties than proactive disclosure
- Immigrants with properties abroad, share portfolios, or frequent cross-border work have more complex reporting obligations in UK tax rules
When to seek professional advice:
- You have income or assets in multiple countries
- You’re unsure whether split-year treatment applies to you
- You’ve previously used the remittance basis and face transitional rules
- You’re a company director or have significant self-employed earnings
- You need to claim relief under a double taxation agreement
Important disclaimer: This article provides general information about UK tax rules for immigrants based on law and rates known for 2025/26. It is not personalised legal or tax advice. UK tax rules change, and individual circumstances vary. If you’re unsure about your position, consult a qualified UK tax adviser or immigration solicitor who can explore the UK tax rules applicable to you in detail.
Get Trusted Legal Guidance on UK Tax Rules for Immigrants
Immigration decisions have wider legal and financial implications, including tax residence, employment compliance, and long-term settlement planning. At Salam Immigration, our experienced UK immigration lawyers provide more than application support—we offer strategic legal guidance to help you navigate the UK system with confidence and clarity.
Whether you are entering the UK for work, reuniting with family, planning permanent settlement, or need an easy analysis of UK tax rules, our solicitors assess your circumstances carefully and provide tailored advice aligned with UK immigration law and regulatory requirements. From initial eligibility assessments to ongoing legal support, we are committed to protecting your interests at every stage of your journey.
With over 20 years of experience, a strong success record, and a client-focused approach, Salam Immigration is trusted by individuals, families, and businesses across the UK and abroad.
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