If you’re considering investing in overseas assets, you might be wondering about the tax implications. Here, we explain the overseas investment tax charges you might incur as a UK resident and how to avoid double tax on overseas investments.
What are overseas investments?
Overseas investments are where you put money into assets that are based in another country, rather than the UK. One of the most common ways for investors to do this is to buy overseas shares in a company based in the US or Europe, for example.
How does tax work on UK investments?
When you invest in UK shares or investments, you may be liable for a few different taxes. These include the following:
Stamp duty reserve tax (SDRT): This is a 0.5% tax that is usually deducted automatically when you buy the shares.
Capital gains tax (CGT): This is a tax you pay on the profit or “gain” you make between buying and selling investments. Everyone has an annual CGT allowance (£3,000 for the 2024/2025 tax year) on which they don’t have to pay any tax. Any gain above this is potentially liable for CGT. The rate depends on whether you’re a basic or higher-rate taxpayer.
Dividend tax: If your shares pay dividends, then you may be liable for dividend tax. You have an annual dividend allowance of £500. Above this, tax is charged at 8.75% for basic-rate taxpayers, 33.75% for higher-rate taxpayers and 39.35% for additional-rate taxpayers.
Income tax: This is payable on the interest you earn from certain types of investment, such as government or corporate bonds.
You can find out more about the tax you may need to pay on UK investments in our full guide to tax on investments.
Are the tax rules different on overseas investments compared to UK investments?
If you are a UK resident, you need to pay relevant UK taxes on all of your investment income or gains. This applies whether investments are UK-based or overseas. In theory, provided that your overseas investments are in countries that the UK has a “double-taxation agreement” with, you shouldn’t usually need to pay any overseas tax on top of this.
However, it doesn’t always quite work like this in practice. There may be some countries where either there is no double-taxation agreement or the rules work slightly differently.
Non-UK residents only need to pay UK tax on UK investments. They must follow the tax rules in their country of residence for non-UK investments.
How much tax do I pay on overseas investments?
HMRC won’t charge any more (or less) UK tax on overseas investments than on UK investments. You should usually report income and gains from overseas investments in a Self Assessment tax return. But, in some cases – particularly with income from dividends on overseas shares – the foreign tax authority may deduct its own version of dividend tax before you receive the dividend. In such cases, you may need to take extra steps to avoid being taxed twice.
How much can foreign tax authorities deduct from my dividend income?
Under the UK’s tax agreements with most countries, the typical tax rate on dividends is 15%. In some cases, the rate will be lower or even nothing at all.
Is there a risk of paying tax twice on overseas investments?
Tax on capital gains is pretty straightforward. Usually, you simply declare your gains on overseas investments on your UK tax return and pay CGT as required. You won’t need to also declare gains in the foreign country and won’t be liable for its tax. As such, there’s little risk of being charged twice, so you will not usually need to make a claim.
With other forms of investment income, such as share dividends, many countries will levy their own taxes. So when you receive a foreign dividend, it will often have had some tax deducted at source – but you’ll still be liable for UK tax, risking double taxation. However, you should be able to offset some or all of any foreign tax you’ve paid against your UK tax bill.
Can I claim back foreign tax on overseas investments?
You can usually claim tax relief for any foreign tax you’ve paid. How you claim depends on whether your foreign income has already been taxed, which in turn may depend on the specific country.
If the country where your investments are held has a double-taxation agreement that requires it, you should apply for tax relief before you get taxed on foreign income. Ask the foreign tax authority for a form, or apply by letter if they don’t have one.
In other cases, you can usually claim Foreign Tax Credit Relief when you report your overseas income in your Self Assessment tax return. This offsets the foreign tax you’ve paid against the UK tax that would otherwise be due. However, Foreign Tax Credit Relief won’t necessarily fully balance out what you’ve paid because it’s simply intended to avoid you paying double tax. It doesn’t guarantee you never pay more than you would do in the UK. So, depending on the tax rates in the overseas country, and the specific details of its double tax agreement with the UK, you may not get the full amount of foreign tax you have paid back. For example, if your UK dividend tax rate is 8.75%, and you’ve paid foreign tax at 15%, you won’t be able to claim the amount above 8.75% back.
Do foreign tax rules depend on the country where the investments are held?
Yes. Dividend tax rates can vary between countries, and so can the specific double-taxation agreements that they have in place with the UK. Some countries may not have a double-taxation agreement at all, though HMRC says that you usually still get relief even if there isn’t an agreement.
If you’re planning to make overseas investments – by buying US stocks, for example – it’s worth checking the details of any tax you may be liable for and any double-taxation agreement with the UK before you buy. HMRC has a list of the agreements that exist with different countries, but they’re not always straightforward to understand. Contact HMRC if you need help with overseas taxation rules. Alternatively, you could pay a professional accountant or tax adviser to advise and/or manage your affairs.
Bottom line
Income from overseas shares and other foreign investments is usually liable for UK tax in the same way as income from UK investments. With some investment taxes – such as capital gains tax – the situation is uncomplicated as there’s little risk of also having foreign tax applied. But if you receive an income from overseas investments – via dividends, for example – there’s a risk that the foreign tax authorities may apply tax before paying the dividend. In these cases, you may need to claim Foreign Tax Credit Relief on your Self Assessment tax return. The precise rules vary by country and can get a bit complex, so contact HMRC or consult a tax expert if you need help getting to grips with them.
Finder survey: Are your investment choices mainly driven by financial reasons or your passion for the company?
Response
75+ years
65-74 years
55-64 years
45-54 years
35-44 years
25-34 years
18-24 years
Purely financial
32.89%
32.3%
30.44%
27.78%
29.11%
30.34%
28.46%
Neither, I have never held any investments
28.95%
33.07%
30.67%
27.78%
25.07%
20.58%
25.2%
Mainly financial, but partly passion
15.79%
13.62%
15.33%
17.78%
21.33%
20.84%
20.73%
Unsure
13.16%
9.73%
14.67%
11.85%
12.39%
13.19%
8.13%
Mainly passion, but partly financial
5.26%
8.17%
6.22%
11.11%
8.65%
11.61%
11.79%
Purely passion
2.63%
2.33%
2.67%
3.7%
3.17%
3.43%
5.69%
Neither, I am driven by a different reason
1.32%
0.78%
0.29%
Source: Finder survey by Censuswide of 2025 Brits, September 2022
Frequently asked questions
Yes. You need to pay relevant UK taxes on all investment income and gains, even if the investments are based overseas – including the US. The US allows UK residents to complete a form (W-8BEN) when they buy US shares, which ensures that UK residents pay US dividend tax at the rate agreed in its double-taxation agreement (the default dividend tax charged to US residents is higher). You’ll be able to offset this against UK tax when you complete your tax return to avoid being double-charged. Your broker may ask you to fill in the form when you open an account that allows you to trade in US stocks.
Yes. Regardless of whether you make a profit on UK or overseas assets, including shares, you’re potentially liable for a UK CGT bill. You’ll only need to pay it on your total capital gains for all assets you sell, and only if these exceed your CGT allowance for the year.
We asked Brits whether their investments were predominantly driven by financial reasons or passion for the company/industry. Here's the breakdown of those who are driven by financial reasons.
Response
%
Male
51.40%
Female
48.60%
Source: Finder survey by Censuswide of 2,032 Brits
Ceri Stanaway is a researcher, writer and editor with more than 15 years’ experience, including a long stint at independent publisher Which?. She’s helped people find the best products and services, and avoid the pitfalls, across topics ranging from broadband to insurance. Outside of work, you can often find her sampling the fares in local cafes. See full bio
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Want to know what capital gains tax is, how it works and when you need to pay it? Read our comprehensive guide on what you need to know about capital gains tax including what your CGT allowance is for the 2024/2025 tax year.
Trading US stocks? Find out what the W-8BEN form is, how you need to fill it out with your broker and what it’s for.
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