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HMRC internal manual

Residence, Domicile and Remittance Basis Manual

From
HM Revenue & Customs
Updated
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Remittance Basis: Amounts Remitted: Remittances of 'nominated' income or gains: Remittances of nominated income or gains - example 1

Alexandria has foreign income or gains, and uses the remittance basis

as follows:

  Foreign chargeable gains Relevant foreign income - Jersey Relevant foreign earnings
  Nomination
(from Jersey RFI)          
           
    Paragraph (d) Paragraph (c) Paragraph (a)  
  2010-11 £250,000 £75,000 £200,000 £75,000 RFI
  2011-12 £300,000 £80,000 £120,000 £75,000 RFI
  2012-13 Nil £75,000 £280,000 £75,000 RFI
  2013-14 £130,000 £80,000 £150,000 £75,000 RFI
  Totals £680,000 £310,000 £750,000  

In 2013-14 Alexandria actually and identifiably remits

£30,000 Jersey relevant foreign income that she nominated in 2010 -11
   
£140,000 foreign chargeable gains from 2011-12 and
£50,000 relevant foreign earnings from 2013-14

The ordering rules are triggered. The ‘relevant year’ is 2013-14

Step 1 – Identify nominated income and gains remitted in  the relevant year £30,000 Relevant Amount £220,000
             
             
  Identify the remittance basis income and gains remitted in  the relevant year £190,000        
  Step 2 - Find the total amount of the individual’s foreign income and gains (excluding those nominated) for the relevant tax year Para (a) Relevant foreign earnings (not subject to a foreign tax) £150,000      
  Para (c) Relevant foreign income (not subject to a foreign tax) £5,000        
  Para (d) Foreign chargeable gains (not subject to a foreign tax £130,000        
  Step 3 - Identify the earliest of paragraphs (a) to (h) above for which the amount determined in Step 2 is not nil Para (a) £150,000      
  Step 4 - Where the relevant amount is greater than the amount identified above the relevant amount is reduced by the amount identified £220K less £150K =  £70,000        
  Step 5 - If the relevant amount is not nil go back and repeat Step 3. Take the reference to the first of paragraphs (a) to (h) as a reference to the earliest paragraph not previously taken into account under Step 3          
  Step 3 - repeated Para (c) £5,000      
  Step 4 - repeated Relevant Amount reduced to: £65,000      
  Step 5 - In the order of preference listed above repeat Steps 3 and 4          
  Step 3 - repeated Para (d) £130,000      
  Step 4 If the relevant amount is less than the amount identified, treat the whole of the remaining amount of the transfer as coming from that item of income or gain          
             

Alexandria will be taxed on £220,000 of remittances as if she had actually remitted the following

  2010-11 2011-12 2012-13 2013-14  
           
Foreign chargeable gains Accruing in year £250,000 £300,000 Nil £130,000
Actually remitted £Nil £140,000 £Nil £Nil  
Treated as remitted £Nil £Nil £Nil £65,000  
Relevant foreign income Nominated Arising in year £75,000 £75,000 £75,000 £75,000
Actually remitted £30,000 £Nil £Nil £Nil  
Treated as remitted £Nil £Nil £Nil £Nil  
Relevant foreign income          
Not nominated Arising in year £Nil £5,000 £Nil £5,000  
  Actually remitted £Nil £Nil £Nil £Nil  
  Treated as remitted £Nil £Nil £Nil £5,000  
  Relevant foreign earnings Accruing in year £200,000 £120,000 £280,000 £150,000
  Actually remitted £Nil £Nil £Nil £50,000  
  Treated as remitted £Nil £Nil £Nil £150,000  

If in future years she actually remits any of these monies, the ordering rules will treat her as having remitted something else instead (refer to RDRM35160 - Example 1 continuation).