Understanding SA106: Foreign Income Made Simple
If you have money or earnings from outside the UK, you might need to fill in a special part of your tax return called SA106. It sounds a bit scary, but don’t worry – it’s really just a form to tell HM Revenue & Customs (HMRC) about your foreign income so you pay the right amount of tax.
What Is SA106?
SA106 is an additional section of your Self Assessment tax return. You use it to report income from foreign sources, such as overseas jobs, bank accounts, investments, or rental properties abroad. It works alongside your main tax return (SA100) to give HMRC a full picture of your income from both the UK and overseas.
What Counts as Foreign Income?
Foreign income is any money you receive from outside the UK. This can include:
- Salary or wages – if you worked abroad and got paid there.
- Dividends – money from owning shares in foreign companies.
- Rental income – rent from a property you own overseas.
- Pensions – income from a pension plan based outside the UK.
- Interest – earnings from foreign bank accounts or savings.
Who Needs to Use SA106?
You’ll usually need to complete SA106 if you’re a UK taxpayer and you have any of the following:
| Type of Income | Do You Need SA106? |
|---|---|
| Foreign salary or wages | Yes – if you need to report it on your Self Assessment return. |
| Overseas pensions | Yes – if you receive pension income from abroad. |
| Rental income from property abroad | Yes – if you let out a property outside the UK. |
| Interest from foreign bank accounts | Yes – if it needs to be included in your return. |
| Dividends or other foreign income | Yes – if you receive income from overseas investments. |
You may also need SA106 if you’re claiming foreign tax credit relief where tax has already been paid in another country.
Why Is SA106 Important?
The UK tax system is based on fairness. If you’re a UK resident, HMRC usually needs to know about your worldwide income, not just what you earn in the UK. Completing SA106:
- helps HMRC work out whether you owe extra tax – or are due a refund
- ensures you get credit for any foreign tax you’ve already paid (where applicable)
- helps you avoid penalties and problems later for not declaring income
What Information Do You Need for SA106?
Before you start, it’s helpful to gather:
- Foreign payslips or employment summaries
- Statements from overseas bank accounts and investments
- Rental statements and expense records for overseas property
- Documents showing foreign tax paid (if any)
What Does the SA106 Form Include?
The SA106 form is broken down by type of foreign income. Here’s a quick overview:
| Type of Income | Description |
|---|---|
| Salary | How much you earned from jobs abroad. |
| Dividends | Total dividends from foreign company shares. |
| Rental income | Money received from renting out property outside the UK. |
| Pensions | Amounts from overseas pension schemes. |
| Interest & other income | Interest from foreign bank accounts and any other foreign income. |
How to Fill Out SA106
- Gather your paperwork: Collect payslips, bank statements, rental records and any documents showing foreign tax paid.
- Convert to pounds (GBP): If your income is in another currency, convert it to pounds using official exchange rates for the tax year.
- Enter your income: Put each type of foreign income in the correct section on SA106.
- Add foreign tax (if any): Include details of tax already paid abroad if you’re claiming foreign tax credit relief.
- Submit with your main return: Complete your SA100 tax return and attach SA106 (or fill in the foreign income section if you’re filing online).
Final Thoughts
SA106 is simply a way of telling HMRC about the money you’ve earned from outside the UK. Once you break it down into income types and gather the right documents, it’s much less intimidating than it first appears.
If you’re ever unsure what to include or how to treat a particular type of foreign income, it’s always wise to get professional advice or use a trusted service like Tax Online to guide you through the process and help you get it right.
