NRI tax UK and India 2026: HMRC residency rules, the FIG regime replacing non-dom, DTAA relief, NRE/NRO taxation, and Self Assessment deadlines explained.
If you're an NRI splitting your life between the UK and India, you owe money to two tax systems that don't talk to each other. HMRC taxes you on your worldwide income once you're UK resident. India taxes you only on Indian-source income. The India-UK DTAA is what stops you paying full tax twice on the same rupee. Here's how the two sides fit together in 2026.
A quick note before we start. This topic sits right on India's tax transition. Income up to FY 2025-26 (AY 2026-27) is taxed under the Income-tax Act, 1961. Income from Tax Year 2026-27 onward falls under the Income-tax Act, 2025. Wherever a section number matters, we've given both, checked against the Income Tax Department's official 1961-to-2025 mapping utility.
Your residential status decides who taxes what. Section 6 of the Income-tax Act — and yes, the number hasn't changed between the 1961 Act and the 2025 Act — sets India's test. HMRC uses a completely separate one: the Statutory Residence Test, laid out in its RDR3 guidance.
Here's the bit that trips people up. You can be UK resident and an Indian NRI at the very same time. That's not a mistake in your paperwork. It's completely normal, and it's the whole reason the DTAA exists in the first place.
Applies to | Doesn't apply to |
|---|---|
Indian citizens living, working, or studying in the UK who still hold Indian bank accounts, property, or investments | Someone who's cut all Indian financial ties and has no Indian-source income left |
UK residents earning Indian rental income, NRE/NRO interest, dividends, or pension income | UK citizens with no Indian income or assets at all |
Anyone in their first 4 years of UK residence after 10+ years abroad (FIG regime eligibility) | UK residents past their 4-year FIG window — they're taxed on worldwide income as it arises |
NRIs selling Indian property while UK resident | Resident Indians selling property in India (different TDS rules apply to them) |
One note worth adding: dual citizens and OCI holders follow the same rules as any other NRI. Citizenship doesn't change your tax residency test on either side — only your actual days and ties do.
You're a Resident of India if you spend 182 days or more in India in the financial year, or 60 days plus 365 days across the four years before that. Indian citizens and PIOs visiting from abroad get that 60-day figure relaxed to 182 days, so an ordinary trip home for a wedding or Diwali won't accidentally make you a resident. [Source: incometax.gov.in]
If your Indian income, excluding anything earned abroad, crosses ₹15 lakh, that relaxed threshold tightens to 120 days instead of 182. Stay under whichever limit applies to you, and you remain NRI, taxed in India only on what you actually earn here.
Coming back for good? Watch for RNOR. Return to India after years away and you might land in Resident but Not Ordinarily Resident status under Section 6(6). You qualify if either of two tests passes: you were non-resident in 9 of the last 10 years, or you spent 729 days or fewer in India across the last 7 years. RNOR taxes you like an NRI on foreign income, usually for 2 to 3 years, even though you're technically Resident on paper. For the full detail on pensions and inheritance tax overlap during this window, Toolisky's RNOR status guide for UK NRIs goes much deeper than we can here.
Spend 183 days or more in the UK in a tax year — that runs 6 April to 5 April — and you're automatically resident, no exceptions at all. But fewer than 183 days doesn't automatically mean you're safe. Three automatic overseas tests can clear you: under 16 days if you were UK resident in any of the past 3 years, under 46 days if you weren't, or full-time overseas work with fewer than 91 UK days and under 31 UK workdays.
In between those extremes sits the sufficient ties test. It weighs your day count against ties like family, an available UK home, UK work, the 90-day tie, and a country tie. With four ties in place, just 16 days in the UK is enough to make you resident. [Source: gov.uk, RDR3 Statutory Residence Test guidance]
From 6 April 2025, the old remittance basis is gone for good. In its place sits the Foreign Income and Gains (FIG) regime. If you're a "qualifying new resident" — meaning this is one of your first 4 years of UK residence, following at least 10 straight years of non-UK residence — you can claim 0% UK tax on foreign income and gains for up to 4 tax years, and bring that money into the UK completely tax-free while you're in the window.
Here's the catch most articles skip over. Claiming FIG means giving up your personal allowance (£12,570) and your CGT annual exempt amount (£3,000) for that year. You claim it through Self Assessment: SA106 for the foreign income itself, SA108 for gains, and SA109 to actually make the FIG claim. [Source: gov.uk, HS266 Foreign Income and Gains regime helpsheet]
Also from 6 April 2025, UK inheritance tax dropped domicile as a test entirely. You're now a "long-term resident" if you've been UK tax resident for 10 of the previous 20 tax years — and once that's true, your entire worldwide estate, Indian property and investments included, sits inside the 40% UK IHT net. Leave the UK after becoming a long-term resident and a "tail" of 3 to 10 years keeps your global estate exposed, depending on how long you'd actually been resident. [Source: gov.uk, Inheritance Tax Manual]
NRE and FCNR interest really is tax-free in India. But being UK resident changes everything: that same interest becomes taxable in the UK on the arising basis. Tax-free in India does not mean exempt in the UK, and this one misunderstanding causes more accidental non-disclosure than almost anything else in this whole topic.
There's a partial fix, though. Tax sparing relief under Article 24(4)–(5) of the India-UK DTAA gives you a notional 15% UK tax credit on NRE and FCNR interest for 10 years from when the account was opened, even though you never actually paid any Indian tax on it. [Source: gov.uk / HMRC treaty guidance]
NRO interest, by contrast, gets taxed in both places — 30% Indian TDS, reducible to 15% once you hand over a Tax Residency Certificate, and then UK tax again on the arising basis, with Foreign Tax Credit capped at that same 15% treaty rate.
Income type | Treaty rate |
|---|---|
Dividend | 10%–15% |
Interest | 15% |
Royalty / fees for technical services | 10%–15% |
Pension income splits across two different articles, and which one applies changes your entire tax position. Government pensions fall under Article 19(2) and stay taxable only where they're paid — an NHS or civil-service pension keeps its UK-only status even after you move back to India. Everything else, including private pensions and the UK State Pension, falls under Article 20 instead, and gets taxed by residence, not by who's paying it.
Example 1 — the common case. Suresh lives in Manchester and draws £18,000 a year from his UK workplace pension, plus ₹1,40,000 in NRE fixed deposit interest back home. He's UK resident and not claiming FIG this year. His NRE interest stays untaxed in India, but it still has to go on his UK SA106. At roughly ₹106 to the pound, that's about £1,320, added to his other UK income and taxed at his marginal rate, say 20%. That's £264 in UK tax, partly offset if his 10-year tax-sparing window is still open.
Example 2 — the edge case. Priya moved to London in 2023 after 12 years living outside the UK, so she qualifies for FIG. In 2025-26, her third year, she earns ₹9,00,000 in Indian rental income and books a £3,000 capital gain on Indian mutual funds. She claims FIG for both on her SA109, bringing her UK tax on either down to zero — but she loses her £12,570 personal allowance and £3,000 CGT exemption for that year as a result. Meanwhile in India, her rental income is still taxed under the normal rules: ₹9,00,000 less a 30% standard deduction leaves ₹6,30,000 taxable, since FIG only relieves the UK side and has no bearing on her Indian filing at all.
Confirm your residency for the year, under both Section 6 in India and the Statutory Residence Test in the UK. You need both answers before anything else makes sense.
Get a Tax Residency Certificate from HMRC if you're claiming DTAA relief on Indian income.
File the right self-declaration. For income up to 31 March 2026, that's Form 10F on India's e-filing portal. From 1 April 2026 onward, it's Form 41, filed under Section 159(8) of the 2025 Act.
Hand your TRC and form to the Indian payer — your bank, tenant, or mutual fund registrar — before the payment goes out, so the lower rate applies at source instead of you chasing a refund later.
Report it properly on both returns. In India: Schedule FSI and Schedule TR, plus Form 67 for foreign tax credit. In the UK: SA106, SA108, and SA109, whichever apply to your income.
Your Indian bank deducted TDS at 30% because your TRC wasn't ready in time. Don't panic, the money isn't lost. File your Indian ITR, claim the DTAA or Section 91 relief under Schedule TR, and the refund usually comes through within a few months.
You missed the UK Self Assessment registration deadline. Register the moment you realise. HMRC generally extends your filing deadline to three months from the date on the registration letter, though a late-registration penalty can still apply if tax is owed.
Your bank kept crediting NRE-rate interest well after you'd already become an Indian Resident. Write to the bank straight away and ask for redesignation to a resident account. Your tax liability starts from your actual date of residency change, whatever the bank's records still say.
PAN card and UK National Insurance number
UK Tax Residency Certificate for Indian-side DTAA claims — a digital copy is fine
Form 41 (from 1 April 2026) or Form 10F (for income before that date)
Bank statements showing NRE, NRO, and FCNR interest credited
P60/P45 or pension statements covering your UK income
Passport with entry and exit stamps, as day-count evidence for both countries
On the India side: late ITR filing brings a Section 234F fee — ₹1,000 if your income is under ₹5 lakh, ₹5,000 otherwise — plus 1% monthly interest under Section 234A. Undisclosed foreign assets, once you're a full Resident, risk a flat ₹10 lakh penalty per year under Sections 42–43 of the Black Money Act, 2015.
On the UK side: miss the Self Assessment deadline and it's an automatic £100 penalty the very next day, even if you owe zero tax. After 3 months, that's another £10 a day, up to £900. At 6 and 12 months, a further £300 or 5% of the tax due, whichever is higher, gets added each time. [Source: gov.uk, Self Assessment tax returns: Penalties]
Yes, if you're UK tax resident, your worldwide income — Indian rental, interest, and dividends included — is taxable in the UK on the arising basis, unless you're inside your FIG window and choose to claim it.
No, and this is probably the single most expensive misconception in this whole space. It's genuinely tax-free in India, but a UK resident must still declare it on Self Assessment and pay UK tax, with only partial relief through tax sparing.
India's 182-day test decides Indian residency on its own. The UK's 183-day test is just one of several automatic UK tests — you can end up UK resident on far fewer days if you're holding enough ties to the country.
It's a transitional Indian tax status for NRIs returning home, and it typically runs 2 to 3 financial years. During that window, your foreign income stays exempt even though you're technically a Resident again.
Get a UK TRC, file Form 41 (or Form 10F if it's before April 2026), hand both to your Indian payer ahead of the payment, and report the income along with the credit in your ITR.
Yes, it replaced the old remittance basis completely from 6 April 2025. It isn't "a new tax" — it's a 4-year exemption for genuinely new UK residents, and it stops applying once you've been in the UK more than 4 years or weren't non-resident for the required 10 beforehand.
Under FIG, relieved foreign income can be brought into the UK completely tax-free. Outside FIG, if that income was already taxed on the arising basis, remitting it later creates no fresh charge.
File as soon as you can to stop the daily penalty clock building up, even if you can't pay the full amount yet. The filing penalty and the payment penalty are worked out separately.
Yes, if you're UK resident and not inside your FIG window, that gain is taxable in the UK, with credit given for Indian TDS already paid, subject to the treaty cap where it applies.
Yes. Since 6 April 2025, once you've been UK resident for 10 of the last 20 years, your entire worldwide estate — Indian property included — sits inside the scope of UK inheritance tax, not just your UK-based assets.
Usually, yes, if you have taxable income or gains in both places, though small foreign amounts already fully covered by UK allowances may not require a UK return at all.
Work out which side of the 182/183-day line you actually fall on this tax year. That single number decides almost everything else in this guide. Toolisky's foreign interest tax calculator can show your exact NRE/NRO exposure before you file, and our DTAA guide walks through claiming relief step by step. For the official word, check gov.uk's Statutory Residence Test guidance and incometaxindia.gov.in.
For educational purposes only. Verify all figures at official sources before acting. Toolisky is not affiliated with any government body. Consult a qualified CA or legal professional before making compliance decisions. See toolisky.com/accuracy-and-limitations.
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