UK Tax Filing for NRIs: Rules, Deadlines & Step-by-Step Process

Are you also a Non-resident in the UK and need to know how, the UK money affects you…. Let’s have a complete guidance on every easy compliance applicable to NRI’s.

An Indian living in the UK -  earning income, having investments or having ties (Property, Job, Close family) is commonly referred to as an NRI (Non-Resident Indian) in UK.

If you are Earning money in UK, it is imperative that HMRC (UK government’s tax department) wants to know more about it.

As a tax resident, if you earn a certain category of income above a certail limit prescribed by HMRC, you are required to file a Self-Assessment return.

The certain income categories are:

UK Rental Income

UK salary/employment income

UK Capital gains

Dividend or income received from UK sources

foreign income earned through any of these sources

To claim a refund

If you are a director of a Company and lastly,

HMRC may ask for a return if: 

• Income > £150,000

• Investment Income > £10,000

• Foreign Income> £2000

• Complex Tax affairs.

Lets Understand if you are a tax resident with the help of Statutory Residence Test :

SRT is nothing but a 3-step checklist to decide a UK tax residency status (Resident/Non-Resident).

Step 1: Automatic Oversees Test (AOT):

• You Spent < 16 days in UK in the tax year.

• You spent < 46 days in UK and you were non-resident in UK for the last 3 years.

• You work full-time in abroad and Visit UK for < 91 days, with < 31 working days in the UK

Meeting any one of the above criteria- You are a Non-Resident.

Step-2 Automatic UK resident test:

• You spent ≥ 183 days in UK.

• You have a home in UK where you stay ≥ 30 days and No overseas home.

• You work Full-time in UK for ≥ 365 days.

Meeting any one of the above criteria- You are a UK Resident.

Step-3 Sufficient Ties Test:

This test is applicable only if Step 1 & Step 2 are inconclusive.

Your UK Ties:

• Family tie (spouse/partner/minor kid in UK)

• Accommodation tie (place available to stay)

• Work tie (40 + UK work days)

• 90-day tie (you spent 90+ days in UK in any of last 2 years)

• Country tie (only for leavers – UK is where you spent the most days)

The above list imitates that:

• If more ties you have- fewer days are needed to become a resident in UK.

• Your residency = Days + Number of Ties.

Precisely we can say, Tax residency status through SRT is dependent on 3 main principals:

1. How long you stayed,

2. Where you work &

3. How strongly your life is tied to UK.

Income of NRI’s that comes under a compliance shed:

1. An NRI earning more than £2000 in India or in UK is mandatorily required to file a Self-Assessment return in UK.

2. NRI’s filing Self-Assessment return is mandatorily required to report their global income in the UK. In simple words, all the foreign income is required to be declared by the tax payer.

3. NRLS Scheme in UK: If you earn a property income in UK. Even if you stay abroad, you automatically come under the NRLS scheme. There are 2 ways to pay Tax on Income:

4. The tenant of yours is required to deduct 20% tax from the payment he makes.

5. You can apply to HMRC to receive the rent without deductions.

In case 2, You are mandatorily required to file the UK returns and pay the tax on the net rental income (after deducting all the deductions-exclusively for renting a property).

The Concept of Double Taxation Relief (India-UK DTAA):

DTAA is an agreement between both the countries to make sure that the income earned is not taxed twice.

If you pay tax in one country, there will be a relief in other country.

DTAA generally come in to force when:

• You are a tax resident in one country and 

• The earned income is taxable in both the countries.

The common rule is, you report the income in both the countries while you claim a ‘foreign tax credit/relief’ in the resident country.

Let’s understand it with an example : 

If you are a tax resident in the UK earning a salary income and you have interest income arising in India, you will declare the interest income earned in India since it has arisen in India and pay taxes on the same. 

In the UK – you will declare the salary earned in UK (+) the interest income earned in India and pay taxes on both. 

Now, here is the catch - since you have already paid some taxes in India you will get tax relief in the UK. The relief will be greater of the tax paid in India and tax payable in the UK on the same income. 

Hence, No double taxes.

Step-by-Step Process: How NRIs File a UK Tax Return:

Step 1: Register for Self-Assessment (SA1 or NRL1):

If you are earning an income in UK, Register yourself to HMRC.

1. If the income is other than property and from property you need to apply for “SA1”.

2. If the income is only from the property (Rentals) in the UK, You need to register for NRL1- It allows you to apply for gross payment of rent.

(You are still required to file a self-assessment return.)

 Documents required for registration:

• Personal Details

• UK Connection details

• Identification-Passport

• Agent Authorisation (If agent files on behalf)

Therefore, submit an application online, HMRC creates a profile in their system (after verifying non-resident status), Generate a UTR for you in 10-21 days, It sent it to your address (UK/Abroad) & File your Self-Assessment return.

Step 2: 

Option 1: Maintain records (MTD-Compatible Software)

Making tax digital (MTD) is mandatory from 6^th April 2026 for self-employed/Landlords earning income of > £ 50,000 in Year 24-25.

This simply means you are required to record your income and expenses transactions in MTD-Compatible software recognized by HMRC and file quarterly updates to HMRC after every quarter. Also, the final return at the year end.

Option 2: Excel/Workbooks

If Self-Assessment is mandatory for you because of the conditions specified above and MTD is not applicable to you, it is advised to maintain the records of your income and expenditure in an excel or workbook.

Step 3: Calculate Taxable Income:

Calculation of taxable income (Other than rentals):

1. Add all income that arises from different sources.

2. Salary, Self Employment, dividends, savings, foreign income.

3. Subtract all the allowable expenses.

4. Pension, Business expenses, Professional fees, PSA, dividend allowance.

5. Make an addition of all the income categories.

6. Subtract personal allowance.

7. Apply tax rates based on income band.

Calculation of taxable income (rentals):

Rental Profit calculation = Total rent received – allowable Expenses.

Here in the above case, allowable expenses are the expenses incurred wholly in connection with rent.

Some expenses which are not allowed by HMRC are:

• Property improvements (e.g., extensions, renovations)

• Initial legal cost for buying a property

• Your own personal labour

• Private expenses

Are NRI’s also eligible for tax free Personal allowance:

Personal allowance up to £12,570 are tax free in UK.

Personal allowance are not automatically available for NRI’s directly. But in certain circumstances HMRC do allows it. When:

• You were UK resident part of the year.

• You were taxed in UK via payroll.

• You filed NRL scheme and HMRC allowed it on review.

• Split-year treatment applies.

If you left the UK this year:

You may still claim split-year relief, and for the resident part of the year, you get full personal allowance.

Tax rates per band:

• Personal allowance: £0 - £12,570 = Tax free.

• Basic Rate: £12,571–50,270 = 20%

• Higher rate: £50,271–125,140 = 40%

• Additional rate: £125,141+ = 45% 

Step 4: Filing of the Self-Assessment Return (SA100 + Schedules)

This is the noteworthy part of the steps. After calculating the taxable income, its time to file the return of income.

‘SA 100’ is the main return form for every individual.

It includes: -

• Personal details

• Employment income (P60, P45, P11D)

•  Bank interest

•  Dividends

•  Pension income

•  Charitable donations

•  Student loan repayments

•  Tax calculation summary

Self-Assessment return filers are required to file SA 100.

There are schedules attached to the return providing detail information about the income earned. E.g., SA 105, SA 103, SA 109.

SA 105 refers to detailing about the rental income earned by any sources. It includes Gross rents, allowable expenses, Property profits/losses, NRLS tax deducted (For non-residents).

SA 103 refers to detailing about self-employment. A person having: 

• income of < £85,000 is required to file SA 103S (Short form)

• income of > £85,000 is required to file SA 103F (Full form)

SA 109 refers to detailing about residence, remittance & Non-Residency Schedule. It is mandatory to following types of assesses.

• Non-Resident for a tax-year

• Claiming split year treatment

• Used remittance basis (till FY 24-25)

• Double taxation relief rules applicable

• Lived/worked abroad part of the year

• Received a foreign income

Online filing vs Paper filing

Self-Assessment (SA) for the tax year is filed on 31^st January of following year. Whereas a person filing a return in a paper format is required to file the return by 31^st October.

In common parlance, people always prefer to file the SA returns online. But in some exceptional cases, even a paper work is requested/preferred by HMRC.

Such cases are:

• HMRC online system rejecting the complex schedules.

• Non-residents claiming certain reliefs requiring paper submissions.

Important UK Tax deadlines:

5^th October:

If you want to file a tax return for the very first time. (SA1 and NRL1). The due date for registering to HMRC is 5^th October following the tax year.

31^st January

The due date for filing a ‘SA return + Payment of taxes + Payment of advance tax to payment of accounts for the next financial year’ is 31^st January following the tax year.

31^st July

The due date for filing an advance payment of taxes for next financial year (If Payment of accounts is triggered).

31^st October

It is the due date for people filing the paper SA returns offline.

Extra: You are supposed to make the payment on accounts:

• If you owe more than £1000 in tax after PAYE. AND

• Less than 80% of your total tax was already collected at source.

Each payment is generally 50% of last years tax liability.

MTD Deadlines (April 2026 onwards):

This scheme requires individuals and landlords earning > £50,000 in a tax year to comply with MTD from 6^th April 2026. (Income & Expense transaction to be recorded in MTD-compatible software).

It mandates Quarterly updates to be filed after each quarter.

E.g., Return for Quarter April to June to be submitted by 7^th of August via software.

It is also required to submit a final year end return due by 31^st January of following year.

Common Mistakes NRIs Make & How to Avoid Them:

• NRI’s often make mistake by assuming that foreign income is not required to be declared in UK. Which is not true. Global income now is taxable in UK from April 2025.

• If you are living outside UK but earning a property rental income in UK. You are required to register in NRL’s. If you don’t register, deduct 20% tax or HMRC is required issue a compliance letter.

• It often claims incorrect or non-allowable expenses which results in interests and penalties.

• Filing SA 109 incorrectly. Incorrect remittance basis claims, Tick marking the wrong residency box, not attaching supplementary schedules etc.

• Non-Maintenance of transactions in MTD, not updating timely returns, still maintaining manual spreadsheets etc.

Penalties for Non-Compliance:

1. Late filing penalties:

2. £100 fixed penalty (even if no tax is due)

3. After 3 months → £10/day up to £900

4. After 6 months → £300 or 5% of tax due

5. After 12 months → Additional £300 or 5%

6. Late Payment interest: which is charged from 1^st February until the tax is fully paid.

7. Penalties for inaccurate returns/false claims:

8. 15% to 30% (careless errors)

9. 20% to 70% (deliberate errors)

10. Up to 100% for deliberate and concealed errors.

Documents NRIs Need for UK Tax Filing:

• Identity & HMRC details (Passport, UTR, National insurance no., UK or oversees address etc.)

• UK Rental Income (SA 105) (Rental Agreement, statements, receipts of allowable expenses, NRLS documents)

• UK Employment income (P60, P45, P11D, RSU/ESPP Statements)

• Self-employment income (SA 103)

• Foreign Income (SA 106) (Rental, interest & dividends, capital gains, salary)

• DTAA/Foreign tax credit. (Proof of tax paid abroad, tax residency certificates)

• Bank statements. (UK + Overseas)

• UK Capital gains

• Pension & Investments

• Crypto assets. (All types of reports)

FAQs for NRIs Filing Taxes in the UK:

1. Do NRIs get personal allowance?

2. Being a non-resident, No Personal allowance to NRI’s (barring Few Exceptions).

Residency > citizenship in this case.

2. Do NRIs need a UK bank account?

3. NRI’s do not need a UK bank account. It is totally optional to have a UK bank account.

3. How to claim DTAA?

4. You can claim DTAA by declaring a foreign income in SA 106, attaching SA 109, Claiming foreign tax credit based on tax already paid abroad.

4. Is MTD mandatory for NRIs?

5. Yes, it is mandatory, if they have property(UK) or business income of > £50,000 even if they live outside UK.

5. Can NRIs file from abroad?

6. Yes, an NRI can file an SA return from abroad(online) by having an overseas address and also without a UK bank account.

Declaration of foreign income/tax compliance rules have always a matter of fact for every NRI in UK.

Therefore, To conclude, Self-Assessment filing of returns for NRI’s is atmost important these days. It is necessary to report the UK-source income, Claim the DTAA benefits, prove non-residency via SA 109 and stay full compliant with HMRC. The remittance scheme for non-doms is also abolished from April-2025. Hence, Global income is taxable for every income earner in UK. 

Well, Go through the information thoroughly, interpret the rules, decide whether you fit in the criteria and stay compliant by filing timely returns.

Get the Consultant now, Have an accurate data, Have a stressful filing.