Tax guidelines and regulations for large money transfers into the UK

If you are transferring large amounts of money into the UK, it is important to know what the potential tax implications could be. For most international money transfers, there is unlikely to be any requirement to pay tax.

Tax implications of transferring money to the UK

The first thing to note is that if you are a UK resident and you are transferring existing funds/assets to yourself, there are typically no tax implications.

But when it comes to other transfers from overseas, the taxation regulations for the UK are determined by the following:

• The size of the transfer
• Whether the recipient is a UK resident or not
• How the funds are derived
• Any tax treaties in place with the sender’s country

How much money I can send from overseas to UK?

Currently, there are no legal limits on the amount of money you can transfer to the United Kingdom. However, if you’re bringing in £10,000 or more in physical cash you will need to declare it. Also, there are no limits on payments made via bank transfer. Despite this, some major UK banks set daily online limits of £50,000 to £100,000.

Money specialists such as Xe Money Transfers and TorFX allow transfers of any amount for select customers, no matter how large.

Residency in the UK

One of the key factors on whether you’re required to pay tax on money sent from overseas is your residency status. All UK residents have to pay tax on foreign income – unless your permanent home is abroad.

Foreign income includes all forms of the following:

• Wages if you work abroad
• Foreign investment income including dividends and savings interest
• Rental income on overseas property
• Income from pensions held overseas

If you are unsure about your residency status, then you can use the Statutory Residence Test (SRT) to work out your residence status for a tax year. As a general rule, if you live in the UK for 183 days of the year, you will be considered a UK resident.

Tax implications for non-residents

If you are not a UK resident – a non-domiciled person – you do not pay UK tax on your foreign income if the following apply:

• Your foreign income is under £2,000
• Your foreign employment income is under £10,000 and taxes have been paid in the country the funds were received from
• When foreign investment income is under £100

If your foreign income is £2,000 or more, then you can either pay UK tax on it (and may be able to claim it back) or claim the “remittance basis”. This means you only pay UK tax on the income you bring into the UK. But you lose your tax-free allowances for Income Tax and Capital Gains Tax and pay an annual charge if you’ve been a resident of the UK for a certain amount of time.

Claiming the remittance basis is complicated, so it is advisable to seek professional help.

Receiving gift money from abroad

If funds transferred from abroad are a gift, then there won’t be any tax implications as HMRC does not view gift transfers as a form of income.

However, it is still a good idea to consult a UK tax adviser, especially if there are large sums of money being sent. If the received money earns interest, the gains could be taxable.

How can my recipient in the UK get the money?

The UK offers flexible money transfer options. Depending on the transfer company you use, you can set up your transfer for cash pickup, a bank deposit, a deposit to a mobile wallet or an international money order delivery.

Cash pickups may be limited outside of major cities. Read our guide on transferring money to the UK for details on sending and receiving funds.

Frequently asked questions

• How much money can you receive as a gift from overseas in the UK?

  Gifts from abroad are not considered foreign income, so there shouldn't be any tax implications on that front. However, it is still a good idea to consult a UK tax adviser, especially if it is a large amount of money that has been transferred from overseas.