Remittance Basis: Accessing the remittance basis: Remittance Basis Charge - Nomination of foreign income and gains: Relevant tax increase - Example 1
Relevant tax increase: Example 1
Paulo, a non-domiciled long-term UK resident makes a claim to use the remittance basis in 2015. He is a higher rate taxpayer (40%). He has UK-source employment income of £40,000.
His foreign income and gains for the year are as follows:
Relevant foreign earnings (France) £40,000
Relevant foreign income (Spain) £60,000
Relevant foreign income (France) £15,000
Foreign chargeable gains (Germany) £80,000
Paulo nominates £60857 of his foreign chargeable gains, and £30,000 of his Spanish RFI, and £12,600 of his French RFI.
To determine the relevant tax increase we must complete two calculations. The first calculation (a) is of the total amount of Paulo’s income tax and capital gains tax actually payable in the year, as a remittance basis user and RBC payer.
The second calculation (b) is the total amount of Paulo’s income tax and capital gains tax payable in the year less the tax charged less the tax charged on the nominated income and nominated gains.
The relevant tax increase is the total of calculation (a) minus calculation (b)
|Calculation (a)||Calculation (b)|
|Non-savings income (1)|
|Savings income (1)|
|40% on nominated RFI(2)||£42600||=||£12,960|
|Capital Gains (1)|
|28% on nominated CG (2)||£60,857||=||£17,040|
|Total Income Tax and CGT Due||£46,000 (3)||£16,000 (3)|
|Relevant Tax Increase||is||Total (a)||£46,000|
1 Rates used here for the purposes of this example only; use the rates applying in the relevant tax year.
2This is the foreign income and gains that are nominated, and which are thus charged to tax on the arising basis in the year
3 As a remittance basis user, Paulo has no personal allowances due