Remittance definition

Remittance is the sending of money from one person (or entity) to another, or from one place to another place. 

 

Remittances can have tax implications. For example, the payment of a business bill will usually attract some tax relief for the business. The type of remittance being made, can also trigger some tax obligations. For example, the payment of an employee’s salary may require the completion of payroll filings by the employer and the withholding of tax, national insurance and student loan repayments to pay over to HMRC.

 

Remittances to and from the UK can also carry some regulatory implications such as having to prove the source of funds to ensure compliance to money laundering regulations. Banks may ask for the proof of the source of funds, or sometimes a solicitor or accountant involved in a transaction may ask to see proof. Documentary evidence is very important in establishing the paper trail behind a remittance.

 

Managing cross border remittances can also be an important way of managing a person’s exposure to UK taxation if that person has a special tax status of being non domiciled in the UK. This is a complex area and professional tax advice should be sought if you think that you may benefit from structuring your remittances to the UK.