If you’re an Indian living in the UK — London, Birmingham, Manchester, Edinburgh, or anywhere across Britain — 2025 changed everything about how your India investments are taxed. The abolition of the non-dom regime from 6 April 2025 means UK residents are now taxed on worldwide income as it arises, regardless of domicile. No more remittance basis. No more sheltering Indian income by keeping it offshore.
For UK-based NRIs, this is the single biggest tax shift in a generation. But it doesn’t mean investing in India has become unattractive — it means the tax planning has become more important. India still offers returns that the UK simply can’t match, and the India-UK DTAA prevents genuine double taxation. This guide covers how the new regime works, what the DTAA actually does for you, and how to structure your India investments from the UK in 2026.
The Non-Dom Abolition: What Actually Changed
Before April 2025, UK-based NRIs with non-dom status had a powerful advantage: they could keep Indian investment income — capital gains, interest, rental income — outside the UK and pay no UK tax on it. Only money “remitted” (brought into the UK) was taxed. This meant you could invest aggressively in India, let the portfolio compound, and pay UK tax only when you chose to bring the money over.
That’s gone. From 6 April 2025, under the Finance Act 2025, all UK residents are taxed on worldwide income and gains as they arise — regardless of domicile status. Your Indian mutual fund gains, NRO interest, rental income, and dividends are now reportable and taxable in the UK in the year they arise, whether you bring the money to the UK or not.
The 4-year FIG exception
If you arrived in the UK after April 2025 and weren’t UK resident for the previous 10 consecutive years, you get 100% tax relief on foreign income and gains for your first 4 tax years. After that, worldwide taxation kicks in fully. If you’ve been in the UK longer than 4 years, the old non-dom benefit is already gone.
Temporary Repatriation Facility
If you previously used the remittance basis and have unremitted foreign income and gains from before April 2025, you can bring them into the UK at a reduced rate — 12% for the first two years (2025–27), 15% in the final year (2027–28). This is a time-limited window.
The bottom line
If you’ve been in the UK for more than 4 years, your Indian investment income is now fully taxable in the UK. But this doesn’t mean you’re taxed twice — the India-UK DTAA exists precisely to prevent that.
How the India-UK DTAA Protects You
The India-UK DTAA, originally signed in 1993, ensures you’re not taxed twice on the same income. Here’s how it works for each income type:
Dividends
India can withhold tax at 10% (15% for dividends from property investment vehicles like REITs). You report the same dividends in your UK Self Assessment. The UK taxes dividends above the £1,000 dividend allowance (2025–26) at 8.75% (basic rate), 33.75% (higher rate), or 39.35% (additional rate). You claim Foreign Tax Credit (FTC) for the Indian tax paid, so you pay only the difference to HMRC — not both in full.
Interest (NRO accounts)
India withholds TDS at 15% under the DTAA (vs 30% domestic rate). You report the interest in the UK, pay UK tax at your marginal rate, and claim FTC for the Indian TDS. NRE FD interest is tax-free in India — but it is taxable in the UK as foreign savings income. This is a key change from the non-dom era, when NRE interest kept offshore was UK-tax-free.
Capital gains (mutual funds, shares)
India taxes equity LTCG at 12.5% above ₹1.25 lakh and STCG at 20%, with TDS deducted by the AMC. The UK taxes capital gains above the £3,000 annual exemption (2025–26) at 18% (basic rate) or 24% (higher rate). You claim FTC for Indian tax paid. In many cases, the Indian tax covers a significant portion of the UK liability.
Rental income
Taxable in India (tenant deducts TDS at 31.2% from the first rupee for NRI landlords). Also reportable in the UK. FTC for Indian tax paid. If your Indian tax rate exceeds the UK rate on that income, no additional UK tax is due.
The net effect
You pay the higher of the two countries’ tax rates — not both added together. For most income types, this means paying Indian tax and a small top-up to HMRC (or nothing, if the Indian rate is higher).
What You Can Invest In — No PFIC, Full Access
Like Australian and UAE NRIs, UK-based NRIs have clean access to Indian investments. There’s no PFIC regime (that’s a US/Canada issue), no restricted AMC list, and no onerous foreign trust reporting for standard mutual fund investments.
Mutual funds
All Indian AMCs accept investments from UK-based NRIs. Equity mutual funds have historically delivered 12–15% CAGR over 10–20 year periods in India (subject to market risks). Even after UK tax on worldwide income, the net return typically exceeds what UK equity ISAs or pension top-ups can deliver — though direct comparison depends on your specific tax bracket. For fund category guidance, see our best mutual funds for NRIs.
NRE fixed deposits
Rates of 6.50–7.25% p.a., tax-free in India. Post non-dom abolition, this interest is now taxable in the UK as foreign savings income — but even after UK tax, the net return exceeds most UK cash ISA rates (currently 4–4.5%) and is significantly above standard UK savings account rates.
Direct equities
Available through a PIS account and Demat/trading account. More operationally complex than mutual funds but accessible for UK NRIs who want direct stock exposure.
Real estate
UK NRIs are among the most active property buyers in India, but the economics (8–12% entry costs, rental TDS at 31.2%, exit TDS at 20% of full sale value) make financial instruments more efficient for pure wealth creation.
The GBP/INR Currency Dynamic
The British pound has historically been one of the strongest currencies against the rupee. GBP/INR has moved from approximately ₹70 in 2010 to ₹110+ in 2026 — meaning the rupee has depreciated substantially against sterling.
What this means for your investments
When you invest GBP into India, each pound buys more rupees than it did a year ago (on average). When you bring returns back to the UK, the rupee depreciation erodes some of the INR-denominated gains. An equity mutual fund delivering 12% in INR might deliver 8–9% in GBP terms after currency adjustment.
When it doesn't matter
If your goals are in India — retirement, children’s education in India, supporting family, buying property — the money stays in rupees and currency movement is irrelevant.
SIPs as a natural hedge
Investing a fixed GBP amount monthly through a SIP means you buy rupees at different rates over time. Months when the rupee is weak, your GBP buys more units. This averaging reduces exchange rate timing risk significantly.
A structural advantage UK NRIs often miss
The rupee’s long-term depreciation against GBP means your existing GBP savings convert into more rupees today than they will tomorrow. For money you intend to deploy in India, delaying the conversion typically works against you.
Getting Set Up from the UK
Step 1 — NRE/NRO account
Open an NRE account for overseas earnings (fully repatriable, interest tax-free in India) or NRO for Indian-source income. SBI UK, Bank of Baroda UK, ICICI Bank UK, and Punjab National Bank (International) all offer NRI account services with UK-based branches.
Step 2 — PAN card
Mandatory. Can be applied for from the UK through UTI International or NSDL.
Step 3 — KYC validation
Complete KYC with fund houses. Requires identity verification (passport, visa), UK address proof (utility bill, bank statement), and FATCA self-declaration. Digital process for most AMCs.
Step 4 — Tax Residency Certificate
Obtain from HMRC. This proves you’re a UK tax resident and is required (along with Form 10F filed on the Indian IT portal) to claim DTAA benefits — specifically the reduced TDS rates on dividends (10%) and interest (15%).
Step 5 — Start investing
Fund your NRE account via remittance from your UK bank. Set up SIPs or make lump sum investments. The process is entirely remote.
The setup is straightforward, but the tax coordination — ensuring TRC and Form 10F are in place before earning income, tracking FTC claims across two Self Assessment systems, reporting Indian income correctly on your UK return — is where most UK NRIs need support.
Tax Filing: Both Sides, Every Year
In India
TDS is deducted automatically on mutual fund redemptions, NRO interest, dividends, and rental income. File ITR-2 if your Indian income exceeds ₹2.5 lakh or if you want to claim refunds on excess TDS. Our mutual fund tax guide covers the full TDS rate structure.
In the UK
Report all Indian income on your Self Assessment tax return. Claim FTC for Indian taxes paid using the foreign pages (SA106). Keep all Indian TDS certificates (Form 16A), redemption statements, and bank interest certificates — your UK accountant will need them.
Post non-dom, the filing discipline matters more. HMRC now expects full disclosure of worldwide income. Under-reporting Indian income that was previously sheltered under the remittance basis is a compliance risk. The exchange of information clause in the India-UK DTAA means both tax authorities share data — discrepancies get flagged.
Why India Still Makes Sense for UK NRIs
The non-dom abolition changed the tax mechanics, not the investment case. India’s equity markets have delivered 11–16% annualised returns over 10–20 year periods. NRE FDs offer 6.50–7.25% tax-free in India. The India-UK DTAA prevents genuine double taxation. And the rupee’s depreciation against GBP means your sterling goes further in India every year.
What’s changed is that the tax planning can’t be ignored. TRC timing, FTC claims, coordinated filing in both countries — these aren’t optional anymore. They’re the difference between efficient investing and unnecessary tax leakage.
Our team works with NRIs across London, Birmingham, Manchester, Edinburgh, and the wider UK to set up and manage India investment portfolios. We handle the NRE/NRO accounts, KYC, fund selection, and ongoing portfolio reviews — and coordinate with your UK accountant to ensure the DTAA benefits are claimed correctly.
Frequently Asked Questions
How does the non-dom abolition affect UK NRI investments in India?
From 6 April 2025, all UK residents are taxed on worldwide income as it arises — including Indian investment income — regardless of domicile status. Previously, non-dom NRIs could avoid UK tax on Indian income by not remitting it to the UK. Now, Indian capital gains, interest, dividends, and rental income must be reported on your UK Self Assessment even if the money stays in India. The India-UK DTAA prevents double taxation through Foreign Tax Credit claims.
What are the DTAA rates between India and the UK?
Under the India-UK DTAA, dividends are capped at 10% withholding (15% for property investment vehicle dividends), interest at 15%, and royalties at 15–20% depending on type. Capital gains from Indian assets can be taxed in both countries, but the UK provides Foreign Tax Credit for Indian tax paid. You pay the higher of the two countries’ rates, not both added together.
Is NRE FD interest taxable for UK NRIs?
NRE FD interest is completely tax-free in India — no TDS is deducted. However, post the non-dom abolition, it is taxable in the UK as foreign savings income at your marginal tax rate. Even after UK tax, the net return from NRE FDs (currently 6.50–7.25% p.a.) typically exceeds UK cash ISA rates. Under the old non-dom regime, NRE interest kept offshore was UK-tax-free — that advantage no longer exists.
Can UK NRIs invest in all Indian mutual funds?
Yes. UK-based NRIs face no PFIC restrictions (unlike US/Canada NRIs) and no limited AMC list. All SEBI-registered Indian mutual fund houses accept investments from UK residents through NRE or NRO accounts. The investment process — KYC, fund selection, SIP registration — can be completed entirely from the UK.
How do UK NRIs avoid paying tax twice on Indian income?
Through the India-UK DTAA and Foreign Tax Credit (FTC). India deducts TDS on your investment income at treaty rates. You report the same income on your UK Self Assessment and claim FTC for Indian tax paid using form SA106. HMRC credits the Indian tax against your UK liability, so you pay only the difference (if any). The total tax equals the higher of the two countries’ rates — not both combined.
Disclaimer: This blog is for informational purposes only and does not constitute financial, legal, or tax advice. Tax laws in both India and the UK are subject to change. The non-dom abolition from April 2025 is a significant reform — consult a qualified UK tax advisor for advice specific to your circumstances. DTAA provisions, TDS rates, and FTC claims should be verified with current legislation. Mutual fund investments are subject to market risks — read all scheme-related documents carefully. We specialise in Indian financial planning; for UK tax obligations, please consult a qualified UK tax advisor or chartered accountant. Past performance of mutual funds does not guarantee future results.
