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HMRC internal manual

Residence, Domicile and Remittance Basis Manual

HM Revenue & Customs
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Remittance Basis: Exemptions: Business Investment Relief: An Introduction

From 6 April 2012 remittance basis taxpayers who bring their foreign income or gains to the UK and invest it in a target company [see RDRM34340] may claim relief from the UK tax charge that would otherwise arise. The investment can be made in the form of money or other property derived from foreign income and gains from years in which a person was taxed on the remittance basis. The investor may be taxed on either the arising basis or the remittance basis in the tax year in which the investment is made and still benefit from the relief. This is not limited to the individual; a relevant person [seeRDRM33030] can also make a qualifying investment.

In order for the foreign income or gains to qualify for relief from UK tax, the following conditions must be met:

  • the investment is a qualifying investment [see RDRM34330] made in a target company [see RDRM34340], within 45 days of the foreign income and gains being brought to the UK [see RDRM34370]
  • the taxpayer must claim relief from UK tax under this provision as part of their Self Assessment tax return [see RDRM34380].

Jamal, a remittance basis taxpayer brings £250,000 of his foreign income into the UK on 1 October 2012 and immediately invests the money in a target company. Jamal makes a claim for business investment relief on his 2012-13 Self Assessment tax return.

As there have been no potentially chargeable events during 2012-13 [see RDRM34390], the whole of the £250,000 foreign income is treated as not having been remitted to the UK in that year.  

Relief is not available where the investment is made, or where the foreign income and gains are brought to the UK, as part of, or as a result of, a scheme or arrangement whose main purpose, or one of the main purposes of which, is tax avoidance. (s809VA(7) ITA2007)