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HMRC internal manual

Residence, Domicile and Remittance Basis Manual

Remittance basis: introduction to the remittance basis: overview of the remittance basis regime: overview of the remittance basis regime from 6 April 2008

Finance Act 2008 Schedule 7 introduced a package of measures for the taxation of foreign income and gains of certain UK residents on the remittance basis.

The remittance basis is an alternative basis of taxation in respect of foreign income and gains only, which is available to some UK residents who are either:

  • not ordinarily resident (NOR), up to 2012-13, and/or
  • not domiciled (ND) within the UK.

These new rules are found at Chapter A1 of Part 14 of ITA 2007, from section 809A to section 809Z10. There have also been some consequential changes to certain sections of ITEPA 2003, ITTOIA 2005 and TCGA 1992 to reflect the new rules; further details are contained below or, where appropriate, in the relevant manuals dealing with the specific type of income or gain. From 6 April 2012 and 6 April 2013 there have been some further changes to the remittance basis regime.

The main features of the remittance basis regime, which applies from 6 April 2008, are:

  • The introduction of a £30,000 annual tax charge for individuals over the age of 18 who claim the remittance basis and who have been UK resident for 7 or the previous 9 tax years From 2012/13 onwards a higher remittance basis charge of £50,000 for individuals who have been UK resident for twelve of the previous fourteen years has been introduced. The £30,000 and £50,000 charges are in addition to any tax due on any foreign income and gains remitted to the UK (refer to RDRM32020).
  • The introduction of a claims mechanism to apply the remittance basis across income from employment as well as from savings and investments (relevant foreign income) and foreign chargeable gains (where applicable). Claims are made through the SA Return (refer to RDRM32020).
  • Ending the entitlement to certain personal allowances and to the capital gains Annual Exempt Amount for many individuals who claim the remittance basis although there are exceptions to this (refer to RDRM32040).
  • Other changes to the regime include the introduction of statutory rules governing the meaning of ‘remittance’, and the identification (refer to RDRM33000) and quantification (refer to RDRM35000) of such remittances for UK tax purposes. In addition there are a series of exemptions to these statutory rules covering certain types of remittance, for example, allowing certain personal items, or items such as works of art in the UK for public display or repair to be brought into the UK without creating a taxable remittance (refer to RDRM34000). From 2012-13 new rules were introduced which allow foreign income and gains used to make a qualifying investment (business investment relief - see RDRM34310) and remittances arising from the sale of exempt property in the UK (refer to RDRM34240) not to be treated as remitted