Worldwide income, one pooled overseas property business
UK residents are taxed on worldwide income, so overseas rental profits are taxable here whether the money is remitted to the UK, reinvested abroad or already taxed locally. All your let overseas properties are pooled into a single overseas property business: incomes and expenses are added together to find one net profit or loss, so a loss on one overseas property can offset a profit on another in the same year. The Furnished Holiday Lettings regime and the old EEA distinction were abolished from 6 April 2025, so an overseas holiday let now sits in the same pool. You report the pooled figures on the SA106 foreign pages with your Self Assessment return, converting foreign currency to sterling on a consistent basis.
Expenses, the interest restriction and relief for foreign tax
You deduct expenses incurred wholly and exclusively for the letting: agent and management fees, insurance, repairs, local property taxes and professional fees. Mortgage interest is different: the residential finance-cost restriction applies to overseas property exactly as to UK property, so your profit is computed without deducting the interest and you then take a 20% tax reducer, with unused amounts carried forward. Where the country the property sits in also taxes the rent, Foreign Tax Credit Relief credits the foreign tax against the UK tax on the same income, capped at the UK figure. Helpsheet HS263 sets out the mechanics, and our guide to double tax relief covers the cap and the treaty rules in detail.
New arrivals, and what to do about undeclared rent
A qualifying new resident, broadly someone who becomes UK resident after at least ten consecutive non-resident tax years, can claim the 4-year FIG regime to exclude foreign rent arising on or after 6 April 2025 from UK tax for up to their first four years here, though each claim year forfeits the Personal Allowance, so it should be modelled rather than assumed. If you have let overseas property without reporting the income, put it right through the Worldwide Disclosure Facility before HMRC makes contact, because offshore penalties are significantly higher than domestic ones and HMRC receives overseas account and property data automatically. Horizon prepares SA106 returns end to end on fixed fees agreed upfront, with non-resident and expat returns from £550, and a free clarity call at /book is the quickest way to get your position mapped.