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HMRC internal manual

Savings and Investment Manual

Savings and investment income: foreign income: remittance basis

Remittance basis

Under Chapter 2 of Part 8 ITTOIA05 the ‘relevant foreign income’ (SAIM1130) of a person who is either non-domiciled or not ordinarily resident in the UK, may be taxed on the remittance basis. Detailed guidance is available in the Residence, Domicile and Remittance Basis manual at RDRM3000.

Up to and including 5 April 2008

  • A claim is required under ITTOIA05/S831.
  • No deductions are allowed from remittance basis income, except for trade income.
  • Remittance basis does not apply to income arising in the Republic of Ireland.

Relief for delayed remittances

ITTOIA05/S835 and S836 were repealed with effect form 6 April 2008. The current legislation dealing with unremittable income can be found from ITTIA05/S841 onwards and has limited application to remittance basis taxpayers.

Up to and including 5 April 2008

Where a taxpayer is chargeable on foreign income for any tax year on the remittance basis a claim can be made under ITTOIA/S835. This applies where the whole or part of the income arose in a year earlier than the relevant tax year and by reason of currency restrictions a person was unable to remit the income to the UK before the tax year. Where the claim is valid, the delayed income is deducted from the remittance basis income received in the relevant tax year, and carried back to the tax year in which it arose.

The claimant must show that he was unable to transfer the overseas income to the UK before the tax year because of the laws of the territory where the income arose or executive action of its Government, or because of the impossibility of obtaining foreign currency there.

Claims under ITTOIA05/S835 must be made on or before the fifth anniversary of the normal self-assessment filing date for the tax year for which relief is claimed.

ITTOIA05/S836 extends relief under section 835 to a person who is granted, with retrospective effect, a pension or an increase of pension assessable on the remittance basis. The amount paid in respect of a previous tax year under the grant is treated as arising in that previous year, and the pensioner as having possessed the source of the pension at that time.

Accrued income scheme (AIS)

Taxpayers who are chargeable on foreign income on the remittance basis may have relevant foreign income from transfers of foreign securities to which the AIS applies (see SAIM4000) where the settlement day is on or after 6 April 2008. SAIM4380 covers the interaction of the AIS rules with those for the remittance basis.

For transfers of foreign securities with a settlement date before 6 April 2008 individuals were excluded transferors and transferees for the AIS.