HomeBlog 3 Common Mistakes NRIs Make When Remitting Money to the UK
3 Common Mistakes NRIs Make When Remitting Money to the UK
Table of contents
- Three NRI Money Myths in UK
- Mistake 1: Believing “If I Earn and Pay Tax in India, I Don’t Need to Declare in the UK”
- Mistake 2: Misunderstanding the FIG Regime (Effective April 2025)
- Mistake 3: Not Keeping Documentation for the Source of Funds
- Key Takeaways
- How CoreAdviz Accountants Can Help
- Frequently Asked Questions (FAQs) for NRIs in the UK
Three NRI Money Myths in UK
For many Non-Resident Indians (NRIs) living in the UK, sending money from India to the UK is a regular financial activity — whether to support living costs, invest, or buy property. Yet, when it comes to UK tax rules on foreign income and remittances, misunderstandings are common and often costly.
At CoreAdviz Accountants, we frequently advise NRIs who are caught out by myths around remitting Indian income to the UK, the new FIG regime, and HMRC reporting obligations.
This article explains the three most common mistakes NRIs make — and how you can avoid falling into the same traps.
Mistake 1: Believing “If I Earn and Pay Tax in India, I Don’t Need to Declare in the UK”
The Myth:
“My Indian salary, rental, or investment income is already taxed in India. It sits in my Resident Ordinary (RO) or NRO account. Since I haven’t remitted it, HMRC doesn’t need to know.”
The Reality:
If you are a UK tax resident, the UK taxes you on a worldwide arising basis — this means all income and gains, wherever they arise, must be declared in the UK, even if:
- You pay tax in India
- You leave the money in India without remitting it to the UK
- You hold the funds in a Resident Ordinary / NRO account
👉 Tip: Always disclose your Indian income in your UK tax return, and claim Foreign Tax Credit Relief (FTCR) under the UK–India Double Taxation Agreement (DTA) where applicable.
Mistake 2: Misunderstanding the FIG Regime (Effective April 2025)
The Myth:
“From April 2025, worldwide income will suddenly start being taxable in the UK under the FIG rules.”
The Reality:
Worldwide taxation for UK residents is not new — it has always been the default. The key change is the abolition of the remittance basis and its replacement with the Foreign Income and Gains (FIG) regime.
- Until 5 April 2025: UK residents who were non-domiciled could claim the remittance basis, meaning they only paid UK tax on foreign income/gains if brought into the UK.
- From 6 April 2025: The remittance basis ends. Instead, qualifying new arrivals (non-UK resident in the previous 10 years) can claim FIG relief for 4 years. Under this, foreign income and gains are ignored for UK tax purposes — even if remitted.
- Important: FIG relief is not automatic. You must file a UK tax return and make a claim.
👉 Tip: If you moved to the UK recently, check if you qualify for FIG and ensure your claim is included in your tax return.
Mistake 3: Not Keeping Documentation for the Source of Funds
The Myth:
“Once money lands in my UK bank account, HMRC won’t question it.”
The Reality:
HMRC can and does challenge unexplained remittances. Without a clear audit trail, they may treat funds as undeclared taxable income.
Documents you should always keep include:
- Gift deeds (if money is a family gift from parents or relatives)
- Sale agreements + Indian tax returns (if funds came from property sales, investments, or mutual fund redemptions)
- Bank remittance certificates (FIRC) or proof of clean capital transfer
- Loan agreements (if the money was borrowed)
👉 Tip: Keep records for at least 6 years. Always disclose any related interest or gains on UK tax returns.
Key Takeaways
The three biggest NRI mistakes when remitting money to the UK are:
- Assuming Indian-taxed income doesn’t need UK disclosure.
- Misunderstanding the FIG regime and missing out on relief (or failing to plan for it).
- Neglecting documentation for source of funds, leaving yourself exposed to HMRC challenges.
How CoreAdviz Accountants Can Help
At CoreAdviz, we specialise in UK–India cross-border tax planning for NRIs. Whether you are:
- A UK resident earning income in India
- Unsure about FIG eligibility from April 2025
- Planning to remit large sums to the UK for property or investments
…our Chartered Accountants and Tax Advisors can help you structure, disclose, and plan efficiently — ensuring compliance while optimising your tax position.
📞 Contact us today or book a consultation.
Frequently Asked Questions (FAQs) for NRIs in the UK
Yes. If you are a UK tax resident, your worldwide income is taxable in the UK. This includes Indian salary, rent, dividends, and interest. You may be able to claim Foreign Tax Credit Relief (FTCR) for Indian taxes paid, under the UK–India Double Tax Treaty.
It depends. If the funds represent clean capital (past savings or already-taxed income), remitting the money itself is not taxable. However, any interest, rental income, or capital gains must be disclosed in your UK tax return.
The Foreign Income and Gains (FIG) regime replaces the remittance basis. For eligible new arrivals, foreign income and gains for the first 4 years are exempt from UK tax, even if brought into the UK. After 4 years, worldwide taxation applies in full.
Yes. While gifts from parents are not taxable in the UK, you must still keep a proper gift deed and bank records to prove the source of funds if HMRC raises queries.
– Bank remittance certificate (FIRC) or transfer record
– Gift deed (if applicable)
– Property sale agreement + Indian tax return (if funds came from property/investments)
– Evidence of past clean capital
HMRC can raise an enquiry, issue penalties, and charge backdated tax with interest. Since Indian banks share account information under the OECD CRS, undeclared income is easily traceable.
