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HMRC internal manual

Residence, Domicile and Remittance Basis Manual

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Remittance Basis: Identifying Remittances: Condition C - Gift Recipients: Gift recipients cannot be relevant persons

If a person is a relevant person RDRM33030 they cannot also be a gift recipient RDRM33240at the same time. The question of whether or not they are a relevant person is considered by reference to their status at the time when the gift is made. ITA07/s809N(3).

Example 1

Kevin gives £5,000 of his relevant foreign earnings to Mary, his granddaughter. Mary’s 18th birthday is on 1 November 2015. The question of whether Mary could be a gift recipient within Condition C depends on the date on which the gift is made.

If the gift is made in June 2015 Mary is a relevant person because she is under 18, so she cannot be a gift recipient.

If Kevin makes the gift in June 2016 then Mary is no longer a relevant person so she could be a gift recipient within Condition C.

Becoming a relevant person

If a gift recipient later becomes a relevant person they cease to be a gift recipient ITA07/s809N(4). Condition C no longer applies, but they may still make taxable remittances of the individual’s foreign income or gains as a relevant person under Condition A and B.

Example 2

In June 2010 Sam, a remittance basis user, uses £8,000 of her relevant foreign income to make an overseas purchase of an antique clock from a dealer in Denmark. Sam immediately makes a gift of an antique clock to Chris and Jo, who at that time are living in Denmark. The clock is kept at Chris’s family home in Copenhagen.

Chris, not being a relevant person, is a gift recipient.

Two years later Jo and Chris split up, and in July 2014, Sam and Chris marry. Chris ceases to be a gift recipient at this time.

In October 2014 Chris brings the antique clock to the UK to the house that is shared with Sam. As Chris is no longer a gift recipient Condition C is not relevant.

However as Chris is now a relevant person there is a taxable remittance chargeable on Sam when Chris imports the clock, under Conditions A and B. This is because property (the clock) has been brought to the UK by a relevant person (Chris) and that property derives from Sam’s foreign income or gains (the £8,000 relevant foreign income) and the property is property of a relevant person (Chris).