Remittance basis ― overview

Produced by Tolley

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

  • Remittance basis ― overview
  • Arising basis and remittance bases
  • Foreign bank interest
  • Foreign pension income
  • Foreign employment income
  • Foreign life insurance chargeable event gains
  • Capital gains and losses
  • Automatic remittance basis
  • Claiming the remittance basis
  • Nominating income and paying the charge
  • More...

Remittance basis ― overview

The rules on remittance changed from 6 April 2008, when it became both more complex and more expensive to utilise the remittance basis. The rules changed again on 6 April 2013 as the abolition of the concept of ordinary residence meant that certain people who had been able to use the remittance basis were no longer able to do so (subject to transitional rules).

This guidance note introduces the remittance basis of taxation that can be accessed by certain UK resident individuals and explains what ‘remittance basis’ means. For details of who can qualify for the remittance basis, see the following guidance notes as appropriate:

  1. Who can access the remittance basis (pre-2013/14)?

  2. Who can access the remittance basis (2013/14 onwards)?

This guidance note discusses the legislation which applies from 6 April 2008 only. For the earlier rules and transitional provisions, see RDRM36000–RDRM36470.

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

This guidance note does not cover trusts. For the interaction between remittance rules and trusts, see RDRM33590 and RDRM33595.

For more on non-resident trusts, see the UK tax position of non-resident trusts guidance note (and other notes in that sub-topic) and Simon’s Taxes Division C4.4.

Arising basis and remittance bases

Most people in the UK are taxable on their worldwide income and capital gains on an arising basis. This means that income is taxable when it is paid to the individual or put at their disposal, for instance, by being credited to a bank account. Gains are usually taxable when the disposal occurs. If the individual is taxable on the arising basis, they must declare all their overseas income and gains in the tax year in which it arises, even if it is not brought into the UK.

An exception to this rule applies where income has ‘arisen’ but which cannot be remitted to the UK. This might happen if interest has been paid into a bank account

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