RFIG30770 - Residence for tax years before 2013-14: liability to UK tax: Scope of liability to income tax on investment income
Source: gov.uk (2025-04-04)


This chapter only applies to tax years up to and including 2012-2013. From 6 April 2013 the Statutory Residence Test (SRT) applies. For guidance on the SRT please see RFIG20000 (https://www.gov.uk/hmrc-internal-manuals/residence-and-fig-regime-manual/rfig20000) onwards

Table 4 - How Investment Income is taxed in the UK

Your UK domicile status

Your UK residence status

Arising Basis (AB) Or Remittance Basis (RB) claimed

Investment Income From a UK Source

Investment Income From a non UK source

UK Government ‘FOTRA’ securities

Domiciled within UK

1. Resident and Ordinarily Resident

AB

Liable

Liable

N/A

Domiciled within UK

2. Resident and Not Ordinarily Resident

2(a) AB

Liable

Liable

Not Liable

Domiciled within UK

2. Resident and Not Ordinarily Resident

2(b) RB

Liable

Liable on remittance

Not Liable

Domiciled within UK

3. Not Resident

AB

Liable

Not Liable

Not Liable

Domiciled outside UK

4. Resident and Ordinarily Resident

4(a) AB

Liable

Liable

N/A

Domiciled outside UK

4. Resident and Ordinarily Resident

4(b) RB

Liable

Liable on remittance

Liable

Domiciled outside UK

5. Resident and Not Ordinarily Resident

5(a) AB

Liable

Liable

Not Liable

Domiciled outside UK

5. Resident and Not Ordinarily Resident

5(b) RB

Liable

Liable on remittance

Not Liable

Domiciled outside UK

6. Not Resident

AB

Liable

Not Liable

Not Liable

Note: Use of this table is subject to any different treatment provided for under the terms of the relevant article in a Double Taxation Agreement.

*Certain types of investment income from a non-UK source are also known as ‘relevant foreign income’.

Resident: Unless the individual is able to use the remittance basis, when they are resident in the UK they are liable to UK tax on the arising basis (AB) of taxation. This means that they are liable to UK tax on all of their investment income, wherever it arises.

Most banks, building societies and other deposit takers in the UK deduct UK tax from interest they pay or credit to an individual’s account.

Note: From 6 April 2016 the government introduced a personal savings allowance for individuals. Basic rate taxpayers can earn up to £1,000 interest tax free, higher rate taxpayers will be able to earn up to £500 interest tax free.

If an individual is resident but not ordinarily resident in the UK they might be able to arrange to have their interest paid without UK tax being deducted and they might not be liable to UK tax on UK Government ‘FOTRA’ securities (Free of Tax to Residents Abroad).

If an individual uses the remittance basis (RB) they are liable to UK tax on all of your investment income from UK sources but any foreign investment income will only be taxed in the UK if it is remitted here.

Not Resident: Although an individual is not resident in the UK they will still be liable to pay UK tax on investment income from UK sources, although there is a restriction on their tax liability for investment income. This restriction is not available for any tax year in which split-year treatment applies. An individual might also be able to receive tax relief under the terms of a double taxation agreement, if one applies.

An individual will not be liable to pay UK tax on any investment income from sources outside the UK.