Remittance basis charge or assessment of worldwide income and gains

By Tolley

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

  • Remittance basis charge or assessment of worldwide income and gains
  • Who can use the remittance basis?
  • Automatic basis
  • Remittance basis claim but no remittance basis charge
  • Claim and charge
  • Treaty non-residence
  • Annual basis
  • Foreign taxes
  • Spousal and civil partner planning

This guidance note explores whether those who are entitled to use the remittance basis should do so. Before an individual can answer this question, he needs to understand the scope of the remittance basis, whether he has to make a claim, and whether he has to pay the remittance basis charge for making a claim.

The decision as to whether to use the remittance basis is made on an annual basis. If an individual chooses not to use it, then he will be taxable on his worldwide income and gains using the arising basis of assessment, as if he was resident and domiciled in the UK. This means he must declare all his overseas income and gains in the year in which it arises, even if none of it is brought into the UK.

Who can use the remittance basis?

Certain individuals are taxable in the UK on their UK income and gains alone, and pay UK tax on foreign income and gains only if these are remitted (brought) to the UK. This is the remittance basis of taxation.

UK resident and non-domiciled individuals have always been able to access the remittance basis and can do so on their foreign income and gains. However, from 2017/18 onwards, to access the remittance basis they must also not be deemed domiciled in the UK. The only exception to this rule is where the individual has unremitted income and gains of less than £2,000; he can continue to access the automatic remittance basis even if he is deemed domicile (see below).

Prior to 6 April 2013, UK residents who were not ordinarily resident could use the remittance basis against their foreign income only (not foreign gains). From this date the concept of not ordinarily resident was abolished, although transitional provisions meant that these people might have been able to continue to access the

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