Penalties for not declaring foreign income

When we live and work in the same country, the question of where to pay income tax is simple. Doubts often arise, however, when at least part of our earnings comes from another country - one common example is living and working in one country while earning rental income from a property in another. How should such earnings be declared? Do we declare all our income only in the country where we are tax resident? It is worth knowing the answers to these questions, because failing to meet your tax obligations can lead to serious financial and legal consequences.

Summary & key takeaways

UK tax residents must declare foreign income in their Self Assessment return.
The penalty for undeclared foreign income can reach 200% of the tax due.
A late Self Assessment return costs £100, plus £10 a day after 3 months.
Voluntarily disclosing arrears to HMRC significantly reduces the penalty.
Tax offices in Poland and the UK exchange income data under the CRS system.

Updated: 30.07.2025

What is tax residence? A tax resident of a given country is a person whose centre of vital interests is located there (e.g. their home, employment, or the residence of their spouse or minor children) or who spends at least 183 days there in the tax year - this is the case both in Poland and in the United Kingdom. If in any doubt, it is worth checking the detailed rules for determining tax residence in the given country.
How does tax residence affect declaring earnings from abroad? Correctly identifying the country where you are tax resident matters because it determines which income you must declare there.
When do you not have to declare foreign income in the United Kingdom? As a UK resident, you must declare all your earnings in the United Kingdom, including income from abroad. Otherwise, only income earned in the United Kingdom is taxable.

It is worth remembering here that the tax year in the United Kingdom and in Poland falls on different dates. The British one starts on 6 April and runs to 5 April of the following year, while in Poland it coincides with the calendar year.

Declaring foreign income in the UK

As a UK tax resident you are taxed in the UK and must declare foreign income (e.g. from work abroad, foreign investments or renting out property) in your Self Assessment return for the given tax year and pay Income Tax on it.

If the same income is taxed twice (both in the UK and where it was earned), it may be possible to claim tax relief to recover part or all of the tax paid.

Important! In the United Kingdom, foreign income means earnings obtained outside the territory of England, Scotland, Wales and Northern Ireland.

What penalty can you face for not declaring foreign income in the UK?

If a failure to declare foreign income in your tax return is detected, it can result not only in having to pay the entire outstanding tax, but also in a penalty being imposed (this can be as much as twice the amount of tax due).

The penalties you may receive include a penalty for failing to file a tax return on time (failure to file on time), for failing to notify HMRC of taxable income (failure to notify), or for providing inaccurate information (inaccuracy).

It is also worth being aware that since 6 April 2011, penalties imposed by the British tax authority, HMRC, can be higher in cases involving income earned abroad.

In November 2017, rules came into force establishing the Requirement to Correct, i.e. the obligation to put right any irregularities concerning tax on foreign income in the UK. Under the RTC, taxpayers had until 30 September 2018 to disclose any failure to meet their tax obligations relating to foreign income from before the 2016/17 tax year. If no disclosure was made, the taxpayer can face a Failure to Correct penalty of:

A maximum of 200% (minimum 100%) of the tax due - in the case of a voluntary disclosure to HMRC;
A maximum of 200% (minimum 150%) of the tax due - in the case of a disclosure after being contacted by HMRC.

What affects the size of the penalty for failing to declare tax on foreign income?

The size of the penalty for not declaring foreign income depends, among other things, on the rates in force in a given tax year, the country where the income was earned, the type of penalty and, importantly, on the taxpayer’s conduct. What does this mean?

The amount owed to HMRC will be higher if the irregularities in your tax affairs are deemed deliberate and the result of concealing information, while it may be lower if you disclose the outstanding tax yourself before the tax authority discovers it.

Filing a Self Assessment return late can result in a financial penalty - its size depends on how far past the deadline you are. The standard late filing penalty is £100, to which the following may be added:

£10 for each day - after 3 months’ delay (up to a maximum of £900);
an additional penalty of 5% of the tax due or £300 (whichever is higher) - after 6 months’ delay. After 12 months, a penalty of the same size can be imposed again.

I did not declare income from another country in England - what should I do?

The best way to avoid tax penalties for failing to declare foreign earnings is, of course, to make sure all your tax liabilities are reported and paid on time.

But what if, through ignorance or by accident, some information is left out of your tax return?

In that situation, it is best to inform the tax authority immediately - a quick and voluntary disclosure provides a good basis for reducing any potential penalties. It is definitely not worth ignoring the problem in the hope it will not be detected, because in the future it may prove very costly.

Does HMRC check properties in Poland?

If you are tax resident in the United Kingdom and at the same time earn money renting out a property in Poland, you need to remember that HMRC can gain access to this information through the Common Reporting Standard (CRS), the system of automatic exchange of information on reportable accounts.

What about declaring UK income in Poland?

People who are Polish tax residents but at the same time work in the UK must file in the United Kingdom for their income from work in the UK, and in Poland for their entire income (both earned in Poland and abroad).

Important! The exact amount of tax due in this case depends on the rules set out in the double taxation agreement concluded between Poland and the United Kingdom.

It is also worth remembering the possibility of recovering overpaid tax from abroad. This is possible, for example, if tax was deducted from your UK income even though its total amount did not exceed the Personal Allowance threshold.

Do foreign earnings have to be declared in Poland?

People subject to unlimited tax liability in Poland (tax residents) must declare their foreign earnings in the tax return filed with the Polish tax office. You need to submit a PIT-36 form with the PIT/ZG attachment, in which you state the amount of your foreign income and the tax paid abroad.

How does the tax office check income from abroad?

The Polish tax office can receive information about a taxpayer’s income in the UK through the Common Reporting Standard (CRS), the system of automatic exchange of information on reportable accounts. The system allows participating countries to collect financial information about earnings obtained on their territory by non-residents and pass it on to the tax authorities in the countries where those people are tax resident.

On the same basis, HMRC can obtain information about the income of UK residents in Poland.

What are the consequences of not declaring foreign income on a PIT return in Poland?

If you provide false information, conceal information or fail to provide information relevant to correctly calculating the tax due in Poland, you may be liable to a fine (of up to 720 daily rates) and/or imprisonment.

The daily rate is set by the court based on, among other things, the taxpayer’s income and financial means, within the legally prescribed limits for the minimum and maximum amounts.

Need help with taxes in the UK?

As an accountancy firm with many years of experience, we understand perfectly well that declaring foreign income in the United Kingdom on your own can be quite a challenge. That is exactly why we offer our clients full support, so they can be sure they have paid all taxes due on time and made use of the reliefs available to them. Need help with your income tax return in England? Or perhaps you want to find out whether you can get a tax refund from abroad? Get in touch - we will be happy to answer your questions and help you better understand your finances.

Sources:

PolAccount

Accounting for Polish businesses in the UK

A team of Polish accountants and tax advisors with years of experience supporting businesses operating in the United Kingdom.

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