If you have undeclared income or assets held overseas, you may owe tax in the UK.
The Worldwide Disclosure Facility (WDF) offers a way to correct your tax affairs where foreign income or gains should have been reported but were not.
HMRC offshore disclosure – Who needs to use the WDF?
The WDF is for individuals, companies, and trusts that need to disclose offshore income, gains, or assets that have not been declared correctly to HM Revenue & Customs (HMRC).
Examples include:
- Interest earned on foreign bank accounts
- Dividends from shares held overseas
- Rental income from a non-UK property
- Gains from selling foreign property or investments
- Income earned while working abroad but still a UK tax-resident
Many people fall into non-compliance unintentionally, particularly where foreign tax systems differ from the UK, or where income was assumed to be exempt.
From April 2025, UK tax residents are taxed on their worldwide income and gains, regardless of their domicile status.
How HMRC finds out about offshore assets
Since signing up to the Common Reporting Standard (CRS), HMRC receives automatic data from more than 100 countries about UK taxpayers with accounts, property, or investments overseas.
This means undeclared foreign income is far more likely to be detected than in the past.
Receiving a ‘nudge’ letter from HMRC is a sign they may already know about your offshore interests.
Once HMRC has prompted you by letter, the scope for reduced penalties is narrower.
Acting before receiving a letter can lead to a more favourable outcome.
Voluntary disclosure is strongly advised before HMRC contacts you.
How to disclose overseas income or assets to HMRC
To use the WDF, you need to make a voluntary disclosure by completing a two-step process:
- Register your intention to disclose via HMRC’s Digital Disclosure Service
- Submit your full disclosure within 90 days, including:
- Details of the undeclared income or gains
- Tax calculations
- Interest owed
- A personal statement explaining the circumstances
- A signed declaration confirming accuracy
You will also be asked to confirm the behaviour that led to the non-compliance. This affects the penalty HMRC will apply.
Penalties for undeclared offshore income
Penalties vary depending on whether the mistake was careless, deliberate, or deliberate and concealed.
Voluntary disclosure usually results in lower penalties, while waiting for HMRC to investigate often leads to the maximum charges, which can be up to 200 per cent of the tax due in some cases.
The longer undeclared offshore income goes unreported, the higher the potential cost.
Do you need help with the Worldwide Disclosure Facility?
If you are unsure whether you need to use the WDF, it is worth seeking advice.
If you believe you may have offshore income or gains that should have been declared, speak to our team today.
