Tax relief is not automatic. Double taxation agreements (also called treaties) are designed to prevent the same income or gain from being taxed twice — but they do not mean the income only needs to be declared in just one country. In many cases, you must still report the income in both jurisdictions, with the treaty determining how relief is given and which country has primary taxing rights.
If you are a UK resident receiving income or gains from overseas, or a non-UK resident earning income or disposing of assets in the UK, you may face tax liabilities in two countries at the same time. The most common types of income covered by double taxation agreements include pensions, employment, capital gains, rental, dividends and interest.
A double taxation agreement, also called a double taxation treaty, is an agreement between two countries that prevents the same income or gain from ultimately being taxed twice. It sets out which country has taxing rights and how relief is given.
In many cases, yes. Even if a treaty prevents double taxation, you may still need to declare the income in both jurisdictions, with foreign tax credit relief applied in one of them.
You can usually claim Foreign Tax Credit Relief or treaty exemption, depending on the type of income. This offsets overseas tax against UK tax (or vice versa) so you don’t pay twice on the same income.
It depends on your residency status and the type of income. Treaties set out specific rules for employment income, pensions, property income, and capital gains.
Non-UK residents will usually need to complete a DT-Individual (DT-I) form. This form allows you to claim exemption or a reduced UK tax rate on certain types of income — such as pensions and interest. The form confirms your residency in another country and once approved, can help you avoid over-deduction of UK tax and the need to reclaim it later.
You need to establish your residence for tax purposes and understand how the treaty’s provisions apply to your situation. We review your circumstances and confirm the correct treatment.
Double taxation treaties can be difficult to interpret, and small mistakes in applying them can lead to paying too much tax, claiming the wrong relief, or reporting income incorrectly in one or both countries. If a mistake in applying a double taxation treaty has been going on for some time, it can easily result in years of overpaid tax — either in the UK or overseas. Once too much tax has been withheld or incorrectly reported, recovering those amounts can be difficult, as many countries have strict time limits for reclaiming tax and may reject claims made too late.
A tax adviser helps identify these issues early, corrects past filings where possible, and ensures the correct treaty relief is applied going forward so the problem doesn’t compound over multiple tax years.