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HMRC internal manual

Residence, Domicile and Remittance Basis Manual

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)            
20% on £31,865 = £12,746 £31,865 = £12,746
40% on £8,135 = £3,254 £8,135 = £3,254
 Total £40,000   £16,000 £40,000   £16,000
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
  less Total (b) £16,000
  Total   £30,000





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