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HMRC internal manual

Residence, Domicile and Remittance Basis Manual

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HM Revenue & Customs
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Remittance basis: accessing the remittance basis: remittance basis charge - nomination of foreign income and gains: making a nomination

Note: Remember only individuals who are non-domiciled may nominate foreign chargeable gains. References to the nomination of foreign income and gains should be read as appropriate to the individual’s status.

Refer to RDRM31040: What income and gains does the remittance basis apply to?

and

RDRM32220: Long term UK resident: Counting years of UK residence

If a long-term resident RDRM32200 claims the remittance basis under section 809B for a tax year their claim must include a nomination of foreign income and gains for that tax year. The nomination is made from so much of the individual’s foreign income and/or gains (or a combination of the two) for that tax year as they choose. It may be all, or just a part of, their foreign income and gains for that tax year.

Example

Frederick is a non-domiciled, long-term resident, paying tax at a 40% tax rate and liable to the £30,000 remittance basis charge. In 2011-12 he had £100,000 interest paid into an overseas bank account. As he is liable to tax at rate of 40%, the amount of this interest Frederick might nominate in his remittance basis claim for 2011-12 is £75,000 of the total £100,000.

In 2012-13 Frederick is paid a further amount of overseas bank interest of £95,000. The nominated amount that is part of Frederick’s claim to the remittance basis in 2012-13 must be in respect of the relevant foreign income or gains of the tax year 2012-13. He cannot nominate any of the interest or other amounts of relevant foreign income or gains that he has from 2011-12 in this later year.

Insufficient nomination

Although an individual may choose to make an insufficient nomination RDRM32360 they must have foreign income and/or foreign chargeable gains from the tax year such that they can nominate something, even if only £1. This fulfils the mandatory requirement that a nomination must be made when making the claim.

Completing the self-assessment return

All claims and nominations are made on the individual’s self assessment tax return. The minimum amount that can be nominated is £1 of foreign income or gains for the claim to be valid. Where a claim to the remittance basis is made under s809B but no nomination of either foreign income or capital gains is made the claim is invalid.

There is also a maximum amount that can be nominated, to ensure that the remittance basis charge does not exceed either the £30,000, or the £50,000 charge. In other words, the nominated amount(s) should be enough (but no more) to create a tax charge of either £30,000 or £50,000, dependent on how long the individual has been resident in the UK for tax purposes.

The mechanism for achieving the necessary charge involves the concept of the ‘relevant tax increase’ RDRM32330.