Remittance basis ― mixed funds

By Tolley
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The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Remittance basis ― mixed funds
  • Introduction
  • Definition of a mixed fund
  • What is not a mixed fund
  • Tracking remittances
  • Interaction with offshore transfers
  • Earnings of those who are not ordinarily resident / overseas workday relief
  • Practical issues

This guidance note explains the concept of ‘mixed funds’ and why they are important. Before reading this note, you are advised to read the When are income and gains remitted? guidance note, as it describes the basic rules with which the mixed fund rules interact. An outline of the remittance basis can be found in the Remittance basis ― overview guidance note.

The mixed fund provisions do not apply to foreign income or gains that arose or accrued before 6 April 2008. For the earlier rules, see RDRM36000–RDRM36470 and Tolley’s Taxwise I 2016/17, Example F6 explanatory notes 14–22.

For commentary on the earlier rules, please click here for the pdf extract from Tolley’s Income Tax 2012/13:

Click here to view pdf

For simplicity, the foreign exchange implications of foreign currency bank accounts have been ignored in this guidance note and in the linked examples. For the interaction between the remittance basis and foreign bank accounts for the tax years to 5 April 2012, see the Remittance basis and foreign currency bank accounts guidance note.

For details of the one-off opportunity to cleanse mixed funds between 6 April 2017 and 5 April 2019, see the Remittance basis ― mixed fund cleansing (April 2017 to April 2019) guidance note.

Introduction

A mixed fund is an overseas fund of money and / or other property which contains:

  • more than one type of income or gains, and / or
  • income or gains from more than one tax year

A simple example of a mixed fund is a single offshore bank account which contains an individual’s relevant foreign earnings, interest (relevant foreign income) and the proceeds from the disposal of an asset, including the chargeable gain which arose on sale.

The

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