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HMRC internal manual

Residence, Domicile and Remittance Basis Manual

HM Revenue & Customs
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Remittance Basis: Amounts Remitted: Mixed Funds: Remittances from mixed funds

The provisions at ITA07/s809Q and R work together to determine whether, in what amounts (and how) transfers from mixed funds are chargeable to UK tax as remittances.

A taxable remittance from a mixed fund is made:

  • where property (including money) is brought to the UK or a service or consideration for a service is provided in the UK for the benefit of a relevant person RDRM33030, or property is used outside the UK to satisfy a relevant debt RDRM33040 so that Condition A of ITA07/s809L applies and
  • the property identified is or derives in some way (directly or indirectly, in whole or in part) from a transfer from a mixed fund of income or gains.

No Mixed Fund

A mixed fund does not exist just because the individual has several accounts with the same banking institution, if each account is separately constituted and contains only one of the relevant types of income from only one year. This will usually include bank accounts set up as sub-accounts under an ‘umbrella’ agreement.

If income and capital sources from a tax year are maintained separately (sometimes referred to as ‘kept clean’ or ‘clean capital’) no mixed fund is created, and so these rules will not apply.

For example, an individual maintains three separate accounts with the same offshore institution:

Account A into which he pays his relevant foreign earnings for the tax year

Account B into which he pays some inherited money (clean capital)

Account C into which he pays some relevant foreign income for the tax year

As long as these accounts do not become mixed funds, the individual can bring money into the UK from Account B and that will be accepted as a being a transfer of ‘clean’ capital, and so will not be a taxable remittance.

However, also refer to RDRM35140 Remittances of nominated income if these (or any earlier) remittances from any source include nominated income or gains.

Refer to RDRM33100 for information about Conditions A and B

Refer to RDRM35000 for information about amounts remitted