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HMRC internal manual

Residence, Domicile and Remittance Basis Manual

HM Revenue & Customs
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Remittance Basis: Introduction to the Remittance Basis: Foreign Income and Gains: Foreign Income and Gains - overview

Chapter A1 Part 14 ITA 2007 applies to foreign income or gains that are remitted or are treated as having been remitted to the UK if the remittance basis of taxation applies to a taxpayer for a tax year under sections 809B, 809D and 809E of that chapter.

Under ITA07/s809F, the remittance basis of taxation applies to:

  • relevant foreign earnings RDRM31120 - sections 22 or 26 ITEPA 2003 Note: relevant foreign earnings means different things depending on the individual taxpayer’s ordinary residence and domicile status.
  • foreign specific employment income - chapter 5A of Part 2 RDRM31130 and part 7 of ITEPA 2003 RDRM31125 
  • relevant foreign income RDRM31140 - section 830 ITTOIA 2005
  • foreign chargeable gains RDRM31170 - section 12 TCGA 1992. Note: the remittance basis is only available where the individual is not domiciled in the UK.

(ITA07/s809F(4)).Nominated income or gains

Income or gains nominated by the individual for the purposes of the remittance basis charge (refer to RDRM32320 - Making a nomination) are not taxed on the remittance basis; instead they are taxed on the arising basis. Because tax, in the form of the remittance basis charge, is paid on nominated income or gains on the arising basis in the process of paying the charge, UK tax has already been paid on any nominated income or gains. So when these nominated income or gains are ‘remitted’ to the UK there is no further tax due (ITA07/s809F(6)).

However there are some special ‘ordering’ rules that apply in certain circumstances when nominated income and/or gains are remitted, which broadly apply if the individual has other foreign income or gains subject to the remittance basis. These rules are complex, but broadly they result in nominated income or gains being treated as the last of the individual’s foreign income or gains to be remitted, even if this is not actually the case. You should refer to RDRM35100 - Remittances of nominated income and gains for more information.

Foreign income or gains not covered by remittance basis

There are some items of foreign income and/or gains that the remittance basis may not apply to, or which have their own rules which interact with the remittance rules covered in this manual. For example: gains under a policy of life assurance, life annuity or on a capital redemption policy. These are always taxable on the full amount on the arising basis, irrespective of your domicile or residency status. Refer to Chapter 9 of Part 4 of ITTOIA 2005 for details, including relief for periods of non-residence.