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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: Relevant foreign income and offshore loans - Example 8

Julia is a UK resident non-domiciled remittance basis user who borrows £1,000,000 from an overseas bank. Only £750,000 of the loan was used to purchase a UK residential property and qualifies for ‘grandfathering’ under the terms of FA08/para 90.

In this case it is acceptable to calculate the qualifying interest element based on the loan capital ratio (that is, the part of the loan which meets the paragraph 90 conditions over total capital of the loan facility), and apply that ratio to the total amount of interest due.

Note: The actual approach in any specific case will depend entirely on the terms of the loan agreements.

If you experience any difficulty in applying these provisions please refer the case, with full details of the loan transactions etc. to the Specialist Personal Tax, PTI Advisory - Remittance Basis Technical Team