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
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Residency in the UK
One of the key factors on whether or not you are 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.
How much money can I send to the UK?
While you won’t hit a legal limit when it comes to sending money to the UK, financial institutions and transfer services may cap how much you can send at a time. Digital money specialists like the commission-free XE transfer allow transfers of any amount for select customers, no matter how large.
Receiving gift money from abroad
If funds transferred from abroad are a gift, then there shouldn’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 advisor, 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.
Our UK guides
- Sending money to the UK: How to send money to UK, safely and affordably.
- How to open a bank account in the UK: Learn what’s required and how to choose the best option for your situation.
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