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The United Kingdom is home to a diverse population, including individuals who are residents but are not domiciled in the country. For these non-domiciled individuals, the UK offers a tax regime known as the remittance basis. This article aims to provide a comprehensive overview of the remittance basis in the UK, exploring its benefits, eligibility criteria, potential drawbacks, and its role in international taxation.<\/span><\/p>\n The remittance basis is an optional tax treatment available for individuals who are residents but not domiciled in the UK and obtain income and gains abroad.\u00a0<\/span><\/p>\n The remittance basis is not available if you are deemed to be UK-domiciled. You will be deemed to be domiciled if you were born in the UK with a UK domicile of origin and are resident in the UK in the tax year 2020-2021 or if you have been resident in the UK for at least 15 of the last 20 tax years.<\/span><\/p>\n In a situation where you are taxable on remittances, you are subject to UK tax in the normal way on UK income and gains. However, you are only subject to UK tax on any remittances of foreign income and gains that you remit to the UK. If you choose to be taxed on remittances, you must include these remittances on your tax return.<\/span><\/p>\n As of 6 April 2015, if you sell or dispose of, all or part of an interest in a UK residential property when you are non-resident, you must notify HM Revenue and Customs (HMRC) within 30 days of the transfer, and you may have to pay capital gains tax on any gain made.<\/span><\/p>\n To qualify for the remittance basis, individuals must meet certain criteria.\u00a0<\/span><\/p>\n First of all, they must be UK residents, meaning they spend a significant amount of time in the UK each year.\u00a0<\/span><\/p>\n Secondly, they must have a non-domiciled status, which refers to their permanent home or the country to which they have the strongest ties.\u00a0<\/span><\/p>\n Non-domiciled individuals, commonly known as “non-doms,” can choose to use the remittance basis for a particular period while they remain UK residents.<\/span><\/p>\n Once an individual qualifies for the remittance basis, he\/she can opt to use it for any given tax year.\u00a0<\/span><\/p>\n Under this basis, the individual is taxed on UK income as usual, but only on the foreign income and gains brought to the UK. The income and gains kept offshore, without being remitted to the UK, remain untaxed.<\/span><\/p>\n If you decide to apply for the remittance basis for the 2020-2021 tax year, you will need to fill in the “Residence, remittance basis, etc.” forms.\u00a0<\/span><\/p>\n The remittance basis does not apply to taxable event gains arising from a life insurance policy, a life annuity, or a capital redemption policy. They are taxable on the full amount that arises during the year, whether transferred or not.<\/span><\/p>\n Usually, foreign income and gains are\u00a0 ‘remitted to the UK’ if they are:<\/span><\/p>\n A remittance cannot occur unless the foreign income and gains are brought back to the UK. The remittance is possible, every time anything derived from the gains is brought back to the UK.<\/span><\/p>\n Generally, remittances to the UK will be made under the general rules, but there are additional rules under which your foreign income and earnings can be transferred to the UK.\u00a0<\/span><\/p>\n An example is if you have donated some of the foreign income or gains, or something derived from them, to a person who is not a relevant person. It is still possible for the foreign income or gains to be transferred if the gift is used in a way that benefits a relevant person.<\/span><\/p>\n Additionally, please note that there is no requirement that the funds or assets have to be physically imported from abroad for a remittance to take place.\u00a0<\/span><\/p>\n A relevant person is considered:<\/span><\/p>\nThe Remittance Basis – explanation<\/h2>\n
Eligibility for the Remittance Basis<\/h2>\n
Applying for the Remittance Basis<\/h2>\n
Remittance basis claim<\/h2>\n
Remitted to the UK<\/h2>\n
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Who is a Relevant person?<\/h2>\n
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Benefits and Drawbacks of the Remittance Basis<\/h2>\n