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HMRC internal manual

Residence, Domicile and Remittance Basis Manual

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HM Revenue & Customs
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Remittance Basis: Remittance Basis up to 6 April 2008: Occasions when there may not be a remittance: Cash only

Before 6 April 2008, relevant foreign income was taxed only if it was brought into the UK as cash. An individual using the remittance basis was able to turn relevant foreign income into an asset outside the UK. They could then bring that asset to the UK without attracting a charge unless and until the asset was sold or otherwise realised for cash in the UK.

Under the transitional rules introduced in Finance Act 2008 (refer to RDRM31400 for more information about the transitional provisions), any asset purchased out of untaxed relevant foreign income which an individual owned on 11 March 2008 remains exempt from a charge under the remittance basis, for so long as that individual owns it, even if that asset is outside the UK and is imported at a later date. Any asset in the UK on 5 April 2008 is also exempt from a charge under the remittance basis for so long as the current owner owns it, even if that asset is later exported and then re-imported.

Example

In May 2004 Illianovic used her Isle of Man bank interest to acquire a car in the Isle of Man; she then arranged for the car to be shipped to the UK to use for her daily commute to Manchester. In May 2007 she sold the car to a dealer in Manchester for £5,000.

For years before 2008-09 no UK tax could be charged on the relevant foreign income remitted to the UK in the form of the car (i.e. in May 2004). There was no chargeable remittance until the car was sold for cash in the UK in May 2007.