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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: Transitional Provisions: Property derived from relevant foreign income not treated as a remittance (2)

Paragraph 86(1) and (3) Schedule 7 Finance Act 2008


As explained at RDRM31460, in certain situations the operation of the previous remittance rules in respect of relevant foreign income RDRM31140 meant that it could be brought to the UK without triggering an immediate tax charge.

As an example, if before 6 April 2008 an individual bought an asset such as a car abroad using his relevant foreign income and the car was then brought into the UK, there would be no income or capital gains tax charge at that time. Instead, the charge would only occur if and when the asset was sold or otherwise realised for cash in the UK (also refer to RDRM31250 Changes to old regime - cash only).

Property consisting of or deriving from relevant foreign income from tax years up to and including 2007-08 may have been brought into the UK prior to 6 April 2008, and the transitional provisions deal with these situations.


The transitional position is that the new rules contained in s809L do not have effect and that property brought to the UK will not be treated as a remittance where:

  • property (other than money) was acquired either directly or indirectly by a relevant person using relevant foreign income before 12 March 2008 and is brought to or received in the UK after 5 April 2008.

The exclusion of money is important as it ensures that income arising from sources that have ceased is subject to the rule changes. See ITA07/s809Y for the definition of money in these circumstances.


This provision is similar to that described in RDRM31460. However this provision applies only to the purchase of property abroad before 12 March 2008 using relevant foreign income, where that property remained abroad and was not brought to or used in the UK before 6 April 2008.

Example 1

Heidi bought a car in Germany on 15 October 2007 using her relevant foreign income. She kept the car at her German apartment until May 2009 when she decided to bring it to the UK to use here. Under the previous rules there would have been no remittance until the car was sold in the UK. Under the new rules at s809L the car is regarded as derived from the relevant foreign income and so, without this transitional rule, there would be a taxable remittance of that relevant foreign income in May 2009.

Example 1A

As for example 1 but this time Heidi decides that she needs a bigger car. In August 2009 she sells her car in Germany and brings the proceeds to the UK. The proceeds from the sale of the car derive from Heidi’s relevant foreign income and would be regarded as a taxable remittance to the UK under the new rules at s809L. But as Heidi’s car (the property) was acquired before 12 March 2008 the transitional rule at paragraph 86(3) applies and what would be regarded as remitted is treated as not remitted. The money from the sale of the car that Heidi brings into the UK is not therefore a taxable remittance.

There will be no foreign chargeable gain on the disposal of the car because her private motor vehicle is not a chargeable asset.