Foreign income and assets can create UK tax obligations, even if tax has already been paid elsewhere.
Where overseas income or gains should have been reported to HMRC but weren’t, the Worldwide Disclosure Facility (WDF) offers a way to correct the position.
The WDF is open to individuals, companies and trusts with offshore income or assets that haven’t been declared properly.
When disclosure may be needed
Situations that might require a disclosure include:
- Interest earned on overseas bank accounts
- Dividends from non-UK investments
- Rental income from property held abroad
- Gains on the sale of foreign property or shares
- Employment income earned overseas while still UK tax resident
Mistakes often happen where foreign tax rules differ from the UK’s, or where there’s a misunderstanding about whether income is taxable in the UK.
From April 2025, all UK tax residents are liable for UK tax on their worldwide income and gains, regardless of domicile.
HMRC and offshore data
HMRC receives regular data from more than 100 countries through the Common Reporting Standard. This includes details of overseas accounts, property and investments held by UK taxpayers. As a result, undeclared income is much more likely to come to light.
If HMRC sends a letter suggesting offshore income may be undeclared, this can reduce the scope for lower penalties. It’s better to come forward voluntarily.
How to make a disclosure
The WDF process has two steps:
- Register an intention to disclose using HMRC’s Digital Disclosure Service
- Submit the disclosure within 90 days, including:
- Details of the income or gains
- Tax and interest calculations
- A statement explaining the circumstances
- A signed declaration confirming the information is correct
You’ll also need to state whether the issue was due to carelessness or was deliberate. This affects the level of penalties HMRC may charge.
Penalties
Penalties depend on the circumstances. If disclosure is delayed or prompted by HMRC contact, penalties are likely to be higher, up to 200 per cent of the tax due in the most serious cases.
Voluntary disclosures tend to lead to lower penalties and a more straightforward process.
If there’s a chance that offshore income or gains haven’t been reported, it’s worth checking. Acting early can limit penalties and help avoid further issues.
We support UK businesses with international operations and help overseas businesses meet their UK tax obligations.
If you’re unsure whether a disclosure is required, get in touch for clear, confidential advice.
Reanda UK is a subsidiary of leading independent accountancy firm Grunberg. Our aim is to help businesses and individuals to navigate the UK’s world-renowned business and tax infrastructure, and to support them with their international ambitions. To find out how we can help you, please contact us.