ACCA Advanced Taxation (ATX) Practice Exam

True or False: A UK resident is always taxed on overseas income.

1. True

2. False

3. Only if the overseas income exceeds a certain threshold

4. Depends on the country of residence

The correct answer is: True

In the UK, the taxation of individuals is primarily based on their residency status. A UK resident is indeed subject to taxation on their worldwide income, which includes all income earned both within the UK and overseas. This principle is fundamental to the UK's income tax system, meaning that as a UK resident, you cannot escape tax obligations on your overseas income merely by earning that income abroad. However, it’s important to note that while UK residents are liable to pay UK tax on their overseas income, this does not mean that they automatically pay double tax on that income. The UK has double taxation agreements (DTAs) with many countries that can provide relief from being taxed twice on the same income. The other alternatives in the question do not accurately reflect the tax treatment of worldwide income for UK residents. The assertion that a UK resident is not always taxed on overseas income could only be true in particular circumstances, like if the person qualifies for non-resident status or specific exemptions under international tax treaties, but this is not the blanket rule for residents. Thus, the assertion that a UK resident is always taxed on overseas income is affirmatively accurate.