Automatic remittance basis

Produced by Tolley
Automatic remittance basis

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

  • Automatic remittance basis
  • Personal allowances
  • Opting out of the automatic remittance basis
  • Unremitted income and gains of less than £2,000
  • Calculating the unremitted foreign income and gains
  • Interaction with £10,000 relief for non-domiciliaries’ foreign earnings
  • Remittances by an automatic remittance basis user
  • Completing the self assessment return
  • Under 18 with no remittances and low UK income
  • Not a long-term resident, with no remittances and low UK income
  • More...

Before reading this note, it is recommended that you read the Remittance basis ― overview guidance note to familiarise yourself with the wider remittance basis regime.

Most people who choose to use the remittance basis have to make a claim, see the Remittance basis ― formal election guidance note.

However, in three cases, the remittance basis is given automatically. These are where, in relation to a given tax year, the individual meets any of the following tests:

  1. he has unremitted foreign income and gains totalling less than £2,000

  2. he is under 18 at the end of the year, has no more than £100 of UK taxed investment income, and no other UK taxable income, and does not remit any relevant income or gains to the UK *

  3. he has been resident in the UK for not more than six out of the last nine years, has no more than £100 of UK taxed investment income, no other UK taxable income, and does not remit any relevant income or gains to the UK *

* Note that these latter two automatic remittance basis cases are affected by the abolition of income tax at source on UK interest, which applies from 2016/17 onwards. This is discussed below.

The three cases of automatic remittance basis are discussed further below, but first this note considers two general points which apply to all three cases of automatic remittance basis.

Personal allowances

Those who claim the remittance basis lose their income tax personal allowances and their CGT annual exempt amount, see the Remittance basis ― formal election guidance note.

However, this does not apply to who can access the remittance basis automatically. This is because the withdrawal of these allowances only applies when the remittance basis is claimed, not when it is automatic.

Opting out of the automatic remittance basis

It is possible for an individual to opt out of the automatic application of the remittance basis via his self assessment tax return. This would mean that the

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