Double taxation - Do I pay tax on rental income in India and the UK?

As an Indian investor, if you own property in the UK, this question usually comes up early:

Do I pay tax on the same rental income in both India and the UK?

It sounds like a genuine concern, but in reality, that’s not how the system works.

If your filings are in order, you won’t end up paying tax twice.

How is the income treated in both countries?

Your rental income is taxed in the UK first, as that is where the property is located.

You will also need to declare the same income in India, since you are an Indian resident.

In the UK, you’ll file a tax return and pay tax on your rental earnings.

In India, you’ll report this under foreign income and disclose the property as part of your overseas assets.

But this doesn’t mean it’s taxed twice.

India and the UK have a Double Taxation Avoidance Agreement (DTAA).

Under this treaty, the UK has the right to tax the rental income first.

India recognises the tax you’ve already paid in the UK and this way, you can claim the amount as a credit against your Indian tax liability.

How tax is usually handled in the UK

If you are living in India and earning rent from a UK property, you fall under the Non-Resident Landlord Scheme UK.

If you have a letting agent managing your property, they are required to:

Deduct tax at the basic rate (currently 20%) from your rental income.

The agent then transfers the remaining amount directly to you.

They also pay the deducted tax directly to HMRC on your behalf.

However, some investors choose a different route.

You can apply to receive rent without deduction. If approved, the full rent is credited to you, and you settle the tax when filing your UK return.

Foreign Tax Credit: the step that many miss

To ensure the system works in your favour, you need to formally claim the credit in India. This is done through Form 67.

Before filing your Income Tax Return, submit this form with details of your UK rental income, tax already paid in the UK and relevant DTAA claim information.

If this step is completed correctly, the tax paid in the UK is adjusted against your Indian tax liability. Failure to do so can lead to double taxation.

Closing thoughts

Owning a rental property in London as an Indian investor is not just about income; it is about structured returns.

The tax structure may seem complex at first, but it is designed to be clear and fair when handled correctly.

Under the India-UK DTAA, proper reporting and correct filings help protect your income from double taxation. This also ensures your investment is compliant and the returns are efficient.

How Benham and Reeves India can help

We work closely with Indian investors who either already own or are planning to buy property in London.

With offices in Mumbai and Delhi, we have been working with Indian buyers since 2011, offering property investment guidance along with rental and lettings management services and end-to-end support for overseas property ownership.

For many investors, managing property and taxation across two countries can feel complex. Our role is to make this simple, structured and easy to handle.