How Much Foreign Income Is Tax-Free in the UK?

For UK residents, how much foreign income is tax-free depends on when you became resident and which rules apply. With changes introduced in April 2025, the way foreign income and gains are treated has shifted significantly.

If you’re a new UK resident who was non-resident for the previous ten consecutive tax years, you may qualify for the new “Foreign Income and Gains” (FIG) regime. Under this, for your first up to four tax years, you can receive qualifying foreign income and gains without paying UK tax — and you can transfer that money to the UK tax-free. It’s a significant relief for newcomers.

However, long-term UK residents or those who don’t meet the FIG criteria will not get this exemption. Their foreign income will generally be taxed just like UK income, at the same rates and with the same allowances as domestic earnings. There’s no blanket “tax-free amount” for all – it depends on your status.

Some allowances still apply to certain types of foreign income. For example, foreign interest might fall under your personal savings allowance, and foreign dividends can be covered by your dividend allowance. Small gains may be covered by the annual exempt amount for capital gains. But these are narrow rather than generous exemptions.

Even if you qualify for FIG, you face important trade-offs. Claiming the relief means giving up your UK personal allowance and possibly the annual CGT exempt amount for the year of claim. It’s vital to weigh the benefit of tax-free foreign income against these lost allowances.

Conclusion

There isn’t a simple fixed “tax-free amount” for foreign income in the UK. If you’re a qualifying new entrant under FIG, you may enjoy full exemption for up to four years. Otherwise your foreign income will be taxed like UK income, with only limited specific allowances available. Your eligibility and tax situation must be checked carefully to ensure you maximise relief.