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HMRC internal manual

Residence, Domicile and Remittance Basis Manual

Remittance Basis: Identifying Remittances: Overview of identifying a remittance: Relevant debt - definition

Broadly, a ‘relevant debt’ is any debt that relates, directly or indirectly, to money or property, including the qualifying property RDRM33260 of a gift recipient RDRM33240 brought to or used in the UK by or for a relevant person. It also includes cases where property is brought to the UK as part of a connected operation. The debt may also relate to a service provided in the UK in similar circumstances.

The relevant debt provisions cover both the principle amount borrowed and the interest paid to service that debt and, where applicable, any debt created by the interest that is due on amounts borrowed (ITA2007/s809L(8)).

Because of these provisions, a relevant debt includes any debt for ‘money lent’ where the lending relates to property or to a service that is dealt with under:

  • Condition A RDRM33120 - a debt that relates (wholly or in part, directly or indirectly) to property (including money) or a service (ITA07/s809L(2)(a) and (b))
  • Condition C RDRM33220 - qualifying property or a service (ITA07/s809L(4)(a) and (b))
  • Condition D RDRM33420 - qualifying disposition linked to property or a service (ITA07/s809L(5)(a) or (b)).

Where foreign income and gains are used as collateral on a loan and the borrowed money is brought to the UK or otherwise used for a purpose to which ITA2007/s809L applies, the foreign income and gains may be regarded as used ‘in respect of’ the relevant debt, so there may be a taxable remittance at this point.

Also refer to RDRM31400 Transitional provisions where the debt is a mortgage loan on UK residential property.