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HMRC internal manual

Residence, Domicile and Remittance Basis Manual

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Remittance Basis: Accessing the remittance basis: Claiming the remittance basis: Who can claim - status conditions

ITA07/s809B(1) sets out the status conditions that an individual is required to fulfil in a tax year from 6 April 2008 onwards, if a claim for the remittance basis is made.

These conditions are that:

  • they must be resident in the UK in the year, and not domiciled within the UK, and or
  • they must be resident in the UK in the year and not ordinarily resident in the UK.

These two statuses are not mutually exclusive. It is possible to be domiciled within the UK but not ordinarily resident in the UK (NOR/Dom), although this is unusual. The more common situation is for individuals to be not ordinarily resident and not domiciled (NOR/ND) or simply ordinarily resident but not domiciled (OR/ND).

For further information about the meaning of these two status terms please refer to booklet HMRC6.

There are differences in how the remittance basis affects individuals depending on their status (refer to RDRM31040 What income and gains does the remittance basis apply to).

As a condition of making the claim under s809B(1), the claim itself must include a statement to the effect that the taxpayer making the claim is not domiciled in the UK, or is not ordinarily resident in the UK or both. This statement is an integral part of the claim process (refer to RDRM32020 Making a claim).

‘Exempt employments’

There is special legislation that provides that the employment income of certain employees who work for certain organisations or government agencies is exempt from UK tax. These are usually European or International agencies, and the employee will be aware of their tax status in relation to their employment income from that institution. The extent and nature of the exemption varies from institution to institution, and sometimes depends on the role undertaken by that employee or officer. Usually such employees remain liable to UK tax on income from other sources in the same way as any other UK resident.

If these employees wish to use the remittance basis in respect of their other income and gains they will be required to claim the remittance basis in the same way as any other user. Any ‘exempt’ employment income may be ignored in computing levels of UK or foreign income or gains.

The special provisions usually provide an exemption from the UK tax effects of an employee’s residence status only for their specific emoluments, that is, the exemption simply removes the liability to UK tax, not the underlying UK residence status. Each year in which the employee is regarded as resident in the UK will count as a year of residence. Also, employees will lose their personal allowances and Annual Exempt Amount and will be subject to the £30,000 charge as well (unless they are RDRM32135 below the £2,000 threshold).

Temporary non-residents

The remittance basis applies only to UK resident individuals.

Relevant Foreign Income

However there are certain provisions at ITTOIA05/s832A in respect of remittances of relevant foreign income in years when an individual is not resident which might have to be considered for individuals who may be deemed to have been temporarily non-resident upon their return to the UK. For full details refer to RDRM32500 Temporary Non-Residents.

Foreign chargeable gains

There are also provisions at TCGA92/s10A in respect of remittances of foreign chargeable gains in years when an individual is not resident which might have to be considered for individuals who may be deemed to have been temporarily non-resident upon their return to the UK. For full details of these rules refer to the Capital Gains Manual.