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HMRC internal manual

Residence, Domicile and Remittance Basis Manual

Residence: Liability to UK Tax: Income arising in the UK

If an individual is not resident in the UK it does not mean that the individual is not liable to UK tax. Depending on a person’s individual circumstances and the type of income involved and whether an individual is entitled to use the remittance basis (see RDRM30000 onwards) will decide if income is taxable in the UK.

An individual will always be liable to UK tax on income earned in the UK and on unearned income from UK sources.

Earned Income

Earned income is any payment an individual receives as a result of an employment, from a trade, profession or vocation they have, or from a pension they receive.

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Unearned Income (Investment Income)

Unearned income is any income that an individual has which is not a pension and has not been earned by them as an employee, by carrying out a profession or by running their own business. Although this list is not exhaustive, unearned income includes:

  • interest from bank and building society accounts
  • dividends on shares
  • interest on stocks
  • rental income received (unless the rental income is part of the income of a trading business).

The following tables RDRM10425 to RDRM10440 will tell you how earned and unearned income arising to resident and not resident individuals is treated.