"I've been getting rent from my property in India for years - and I honestly didn't know that I had to declare it here too."
Written by Suyesh Sharma, FCCA, Founder and Managing Director, Metta Accountants.
Published 11 June 2026
The Rule Is Simple - and Widely Misunderstood
UK tax law taxes its residents on their worldwide income. That includes rental income from property in India, the UAE, Nigeria, the US - anywhere. It does not matter where the property is located, where the rent is paid, or whether the money ever arrives in a UK bank account.
This catches many people by surprise, particularly those who receive a share of rent from a family property managed entirely by relatives overseas. The arrangement feels informal. The money may go straight to parents or siblings. It may never touch a UK account. But in HMRC's view, if you are entitled to that rental income as a UK tax resident, it is taxable here.
But I Already Paid Tax on It in India
This is the most common reason people assume no further action is needed - and it is understandable. If you have paid tax on the rental income in India, why would you owe tax here too?
The answer lies in how the UK-India Double Taxation Agreement (DTA) works. The DTA does not eliminate your UK tax obligation - it prevents double taxation by giving you a credit for the Indian tax you have paid. In practice:
The foreign tax credit relief mechanism allows you to offset Indian tax already paid against the UK tax liability on the same income. If your UK tax rate is higher than the Indian rate, you pay the difference. If Indian tax exceeded the UK rate on that income, there is typically no further UK tax to pay.
The relief does not appear on your return by itself. You must declare the overseas rental income on the SA106 supplementary pages, and separately claim the foreign tax credit. If you have never filed a return, or filed one without the foreign pages, the credit has not been claimed - and HMRC will assess the full UK liability with no offset.
The SA106 is the supplementary form used to report all overseas income and gains to HMRC. For overseas rental income specifically, you declare the gross rental receipts, deduct allowable expenses, and then claim foreign tax credit relief for the tax paid in the other country. The net result is that you are taxed on the profit at UK rates, with a credit for what you have already paid overseas. The income is taxed in the same way as UK rental income - at your marginal income tax rate.
What Expenses Can Be Deducted?
One of the most valuable - and most overlooked - aspects of declaring overseas rental income properly is the ability to deduct legitimate expenses before calculating the profit. Many people who do declare their rental income fail to claim everything they are entitled to.
Costs of repairing or maintaining the property - plumbing, electrical work, repainting, structural repairs. Not improvements, but like-for-like restoration.
Fees paid to a local property manager or agent to collect rent and manage the property on your behalf. Very common in overseas arrangements.
Reasonable travel costs incurred when visiting the property for management or inspection purposes - flights, accommodation, local transport. Must be wholly for property purposes.
Accountancy fees for preparing the rental accounts, legal fees for tenancy agreements, and similar professional costs directly related to the letting.
Interest on loans taken out to purchase or improve the overseas rental property may be deductible - but this is subject to restrictions introduced in recent years. Specialist advice is needed here.
All overseas income and expenses must be converted to sterling. HMRC accepts the use of average annual exchange rates or spot rates at the date of receipt - whichever you use, apply it consistently.
A Story We Hear All the Time
Preethi's flat - six years undeclared
Preethi moved to the UK in May 2020 and has been working here ever since. She owns a flat in Chennai which has been rented out for many years. Since 2020, the rental income - around ₹25,000 per month - has been paid into her Indian bank account, and she uses it to help her parents with household expenses. The rent never came to the UK.
Preethi paid Indian tax on the rent through her Indian tax filings, which her CA handled. She assumed that covered everything. She had never filed a UK self-assessment return because she was employed and paid through PAYE - she did not realise that overseas rental income created a separate obligation to register and file.
When she came to us, she had six years of undeclared overseas rental income. Her UK liability on each year was relatively modest - the Indian tax paid offset much of it - but the accumulated interest on late payments, and the potential failure-to-notify penalty, added significantly to the total exposure.
We made a voluntary disclosure through the Worldwide Disclosure Facility. Because she came to HMRC before they came to her, the penalty was treated as careless rather than deliberate, and was reduced substantially. The total additional UK tax due across all six years, after crediting Indian tax paid, was manageable. The penalty and interest added on top, but was far less than it would have been had HMRC opened an investigation first.
How HMRC Finds Out
This is the question most people ask - and the honest answer is that HMRC's ability to identify undisclosed overseas rental income has improved significantly in recent years.
India and the UK automatically exchange financial account information each year under CRS. This includes bank accounts receiving rental income, investment accounts, and increasingly property transaction data.
HMRC's Connect system cross-references overseas financial data against UK tax returns. A pattern of overseas bank credits with no corresponding rental income declaration is exactly what it is designed to flag.
If rental income - or funds derived from it - has ever been transferred to a UK account, that creates a visible data trail. Large, regular overseas transfers with no declared source are a recognised risk indicator.
Where a UK resident has declared rental income in Indian tax filings but has no corresponding entry in their UK self-assessment, the discrepancy can be identified through information exchange mechanisms.
What Are the Penalties for Years Already Missed?
The penalty HMRC charges depends on why income was not declared - specifically whether it was a reasonable mistake, carelessness, or deliberate concealment. For overseas income, the rules are more severe than for domestic income.
In addition to the penalty, HMRC charges interest on late tax from the date payment was originally due. For income going back several years, the interest element can be as significant as the tax itself.
How far back can HMRC go?
This depends on the behaviour involved:
- Careless errors - HMRC can go back 6 years from the end of the relevant tax year
- Deliberate understatement - HMRC can go back 20 years
- Failure to notify (never filed a return) - HMRC can also go back 20 years
What You Need to Do - Depending on Your Situation
Where you are now determines what to do next.
The right route is a voluntary disclosure - typically through the Worldwide Disclosure Facility (WDF) for overseas income. Coming to HMRC before they come to you results in substantially lower penalties and a managed, predictable resolution. Do not wait.
You can amend returns for previous financial year after the end of the relevant tax year through the normal amendment process. For earlier years, a separate disclosure is required. A specialist review of what years need to be corrected, what expenses can be deducted, and what Indian tax credits are available will establish the true liability - which is often lower than people fear.
Do not respond without taking specialist advice first. What you say in your initial reply - how you describe the circumstances, what you disclose and how - has a direct bearing on how HMRC categorises the behaviour and therefore the penalty range that applies. Bring the letter to us before putting anything in writing.
Register for self-assessment if you have not done so already, and file an SA106 supplementary page alongside your main return each year. Gather evidence of Indian tax paid (certificates, challans) so that the foreign tax credit can be properly claimed. Keep records of all rental receipts and expenses in sterling-equivalent terms.
If you are uncertain about whether you have a UK obligation, whether the FIG regime exempts you, or whether what you receive counts as rental income - the safest approach is a short conversation with a specialist before assuming you do not need to act.
Not sure where you stand?
We help clients regularise years of undeclared overseas rental income - calculating the liability, claiming every deduction and credit available, and managing the disclosure to minimise penalties. The sooner you act, the better the outcome.
Metta Accountants - UK-India Tax Specialists · Suyesh Sharma FCCA · Harrow, London
Suyesh Sharma
Founder & FCCA
Helping high earners and business owners keep more of what they earn through strategic planning.
