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Finance Bill
Schedule 7 — Remittance basis
Part 1 — Main provisions

151

 

Chapter 1 insert—

“Chapter A1

Remittance basis

Introduction

809A    

Overview of Chapter

5

This Chapter provides for an alternative basis of charge in the case of

individuals who are not domiciled in the United Kingdom or are not

ordinarily UK resident.

Application of remittance basis

809B    

Claim for remittance basis to apply

10

(1)   

This section applies to an individual for a tax year if the individual—

(a)   

is UK resident in that year,

(b)   

is not domiciled in the United Kingdom in that year or is not

ordinarily UK resident in that year, and

(c)   

makes a claim under this section for that year.

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(2)   

The claim must contain one or both of the following statements—

(a)   

that the individual is not domiciled in the United Kingdom in

that year;

(b)   

that the individual is not ordinarily UK resident in that year.

(3)   

If the individual—

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(a)   

is aged 18 or over in that year, and

(b)   

has been UK resident in at least 7 of the 9 tax years

immediately preceding that year,

   

the claim must contain a nomination of the income or chargeable

gains of the individual for that year to which section 809G(2) is to

25

apply.

(4)   

The income or chargeable gains nominated must be part (or all) of

the individual’s foreign income and gains for that year.

809C    

Application of remittance basis without claim where unremitted

foreign income and gains under £2,000

30

(1)   

This section applies to an individual for a tax year if—

(a)   

the individual is UK resident in that year,

(b)   

the individual is not domiciled in the United Kingdom in that

year or is not ordinarily UK resident in that year, and

(c)   

the amount of the individual’s unremitted foreign income

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and gains for that year is less than £2,000.

(2)   

The amount of an individual’s “unremitted” foreign income and

gains for a tax year is—

(a)   

the total amount of what would (if this section applied) be the

individual’s foreign income and gains for that year, minus

40

(b)   

the total amount of those income and gains that are remitted

to the United Kingdom in that year.

 
 

Finance Bill
Schedule 7 — Remittance basis
Part 1 — Main provisions

152

 

(3)   

See section 809Z for the meaning of an individual’s foreign income

and gains for a tax year.

809D    

Application of remittance basis without claim: other cases

(1)   

This section applies to an individual for a tax year if—

(a)   

the individual is UK resident in that year,

5

(b)   

the individual is not domiciled in the United Kingdom in that

year or is not ordinarily UK resident in that year,

(c)   

the individual has no UK income or gains for that year,

(d)   

no relevant income or gains are remitted to the United

Kingdom in that year, and

10

(e)   

either—

(i)   

the individual has been UK resident in not more than

6 of the 9 tax years immediately preceding that year,

or

(ii)   

the individual is under 18 throughout that year.

15

(2)   

For the purposes of subsection (1)(c) the individual’s “UK income

and gains” for the tax year are the individual’s income and

chargeable gains for that year other than what would (if this section

applied) be the individual’s foreign income and gains for that year.

(3)   

For the purposes of subsection (1)(d) “relevant” income and gains

20

are—

(a)   

what would (if this section applied) be the individual’s

foreign income and gains for the tax year mentioned in

subsection (1), and

(b)   

the individual’s foreign income and gains for every other tax

25

year for which section 809B or 809C or this section applies to

the individual.

Effect of section 809B, 809C or 809D applying

809E    

Effect on what is chargeable

(1)   

This section applies if section 809B, 809C or 809D applies to an

30

individual for a tax year.

(2)   

The individual’s relevant foreign earnings for that year are charged

in accordance with section 22 or 26 of ITEPA 2003.

(3)   

The individual’s relevant foreign income for that year is charged in

accordance with section 832 of ITTOIA 2005.

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(4)   

If the individual is not domiciled in the United Kingdom in that year,

the individual’s foreign chargeable gains for that year are charged in

accordance with section 12 of TCGA 1992.

(5)   

For the effect on amounts which count as employment income of the

individual under certain provisions of Part 7 of ITEPA 2003

40

(employment-related securities), see Chapter 5A of Part 2 of that Act.

(6)   

Nothing in this section applies in relation to nominated income or

chargeable gains (see section 809G).

 
 

Finance Bill
Schedule 7 — Remittance basis
Part 1 — Main provisions

153

 

809F    

Claim for remittance basis: effect on allowances etc

(1)   

This section applies if section 809B (claim for remittance basis to

apply) applies to an individual for a tax year.

(2)   

For that year, the individual is not entitled to—

(a)   

any allowance under Chapter 2 of Part 3 (personal allowance

5

and blind person’s allowance),

(b)   

any tax reduction under Chapter 3 of that Part (tax reductions

for married couples and civil partners), or

(c)   

any relief under section 457, 458 or 459 (payments for life

insurance etc).

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(3)   

See also section 3(1A) of TCGA 1992 (no annual exempt amount for

chargeable gains).

809G    

Claim for remittance basis by long-term UK resident: charge

(1)   

This section applies if—

15

(a)   

section 809B (claim for remittance basis to apply) applies to

an individual for a tax year (“the relevant tax year”),

(b)   

the individual is aged 18 or over in the relevant tax year, and

(c)   

the individual has been UK resident in at least 7 of the 9 tax

years immediately preceding the relevant tax year.

20

(2)   

Income tax is charged on nominated income, and capital gains tax is

charged on nominated chargeable gains, as if section 809B did not

apply to the individual for the relevant tax year (and neither did

section 809C).

(3)   

“Nominated” income or chargeable gains means income or

25

chargeable gains nominated under section 809B(3) in the

individual’s claim under section 809B for the relevant tax year.

(4)   

If the relevant tax increase is less than £30,000, the amount of income

tax for which the individual is liable for the relevant tax year is

increased by—

30

(a)   

£30,000, minus

(b)   

the relevant tax increase.

(5)   

“The relevant tax increase” is—

(a)   

the total amount of income tax and capital gains tax payable

by the individual for the relevant tax year, minus

35

(b)   

the total amount of income tax and capital gains tax that

would be payable by the individual for the relevant tax year

apart from subsection (2).

809H    

Remittance basis charge: income and gains treated as

remitted

40

(1)   

This section applies if—

(a)   

any of an individual’s nominated income and gains is

remitted to the United Kingdom in a tax year, and

(b)   

any of the individual’s remittance basis income and gains has

not been remitted to the United Kingdom in or before that

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year.

 
 

Finance Bill
Schedule 7 — Remittance basis
Part 1 — Main provisions

154

 

(2)   

Income tax and capital gains tax are charged, for that year and

subsequent tax years, as if the income and chargeable gains treated

under section 809I as remitted to the United Kingdom by the

individual in that tax year had been so remitted (and income and

chargeable gains of the individual that were actually remitted in that

5

year had not been).

(3)   

An individual’s “nominated income and gains” are the total income

and chargeable gains nominated by the individual under section

809B(3) for the tax year mentioned in subsection (1)(a) or any earlier

tax year.

10

(4)   

An individual’s “remittance basis income and gains” are the foreign

income and gains of the individual for all the tax years (up to and

including the tax year mentioned in subsection (1)(a)) for which

section 809B, 809C or 809D applies to the individual, apart from the

individual’s nominated income and gains.

15

809I    

Section 809H: order of remittances

(1)   

The following steps are to be taken for the purpose of determining

the income or gains treated in a tax year (“the relevant tax year”) as

remitted to the United Kingdom by the individual.

   

Step 1

20

   

Find the total amount of—

(a)   

the individual’s nominated income and gains, and

(b)   

the individual’s remittance basis income and gains,

   

that have been remitted to the United Kingdom in the relevant tax

year.

25

   

This amount is “the relevant amount”.

   

Step 2

   

Find the amount of foreign income and gains of the individual for the

relevant tax year that is within each of the categories of income and

gains in paragraphs (a) to (h) of subsection (2).

30

   

If none of sections 809B to 809D apply to the individual for that year,

treat those amounts as nil (and accordingly go to step 6).

   

Step 3

   

Find the earliest paragraph for which the amount determined under

step 2 is not nil.

35

   

If that amount does not exceed the relevant amount, treat the

individual as having remitted the income or gains within that

paragraph (and for that tax year).

   

Otherwise, treat the individual as having remitted the relevant

proportion of each kind of income or gains within that paragraph

40

(and for that tax year).

   

“The relevant proportion” is the relevant amount divided by the

amount determined under step 2 for that paragraph.

   

Step 4

   

Reduce the relevant amount by the amount taken into account under

45

step 3.

   

Step 5

   

If the relevant amount (as reduced under step 4) is not nil, start again

at step 3.

 
 

Finance Bill
Schedule 7 — Remittance basis
Part 1 — Main provisions

155

 

   

In step 3, read the reference to the earliest paragraph of the kind

mentioned there as a reference to the earliest such paragraph which

has not previously been taken into account under that step.

   

Step 6

   

If the relevant amount (as reduced) is not nil once steps 3 to 5 have

5

been undertaken in relation to all paragraphs of subsection (2) for

which the amount determined under step 2 is not nil, start again at

step 2.

   

In step 2, read the reference to the foreign income and gains of the

individual for the relevant tax year as a reference to such of the

10

foreign income and gains of the individual for the appropriate tax

year as had not been remitted by the beginning of the relevant tax

year.

   

“The appropriate tax year” is the latest tax year which is—

(a)   

before the last tax year for which step 2 has been undertaken,

15

and

(b)   

a tax year for which section 809B, 809C or 809D applies to the

individual.

(2)   

The kinds of income and gains are—

(a)   

relevant foreign earnings (other than those subject to a

20

foreign tax),

(b)   

foreign specific employment income (other than income

subject to a foreign tax),

(c)   

relevant foreign income (other than income subject to a

foreign tax),

25

(d)   

foreign chargeable gains (other than gains subject to a foreign

tax),

(e)   

relevant foreign earnings subject to a foreign tax,

(f)   

foreign specific employment income subject to a foreign tax,

(g)   

relevant foreign income subject to a foreign tax, and

30

(h)   

foreign chargeable gains subject to a foreign tax.

(3)   

In this section the individual’s “nominated income and gains” are the

total income and chargeable gains nominated by the individual

under section 809B(3) for the relevant tax year or any earlier tax year.

(4)   

In step (1) of subsection (1) the individual’s “remittance basis income

35

and gains” are the foreign income and gains of the individual for all

the tax years (up to and including the relevant tax year) for which

section 809B, 809C or 809D applies to the individual, apart from the

individual’s nominated income and gains.

(5)   

In step 6 of subsection (1) the reference to income or gains being

40

remitted is—

(a)   

as respects any tax year before section 809H applies, to

income or gains being remitted to the United Kingdom, and

(b)   

as respects any tax year in relation to which that section

applies, to income or gains treated under this section as so

45

remitted.

(6)   

In subsection (2) “foreign tax” means any tax chargeable under the

law of a territory outside the United Kingdom.

 
 

Finance Bill
Schedule 7 — Remittance basis
Part 1 — Main provisions

156

 

Meaning of “remitted to the United Kingdom” etc

809J    

Sections 809K to 809Y: introduction

(1)   

Sections 809K to 809Y apply for the purposes of—

(a)   

this Chapter,

(b)   

sections 22 and 26 of ITEPA 2003 (relevant foreign earnings

5

charged on remittance basis),

(c)   

section 41A of that Act (specific employment income from

securities etc charged on remittance basis),

(d)   

section 832 of ITTOIA 2005 (relevant foreign income charged

on remittance basis), and

10

(e)   

section 12 of TCGA 1992 (foreign chargeable gains charged

on remittance basis).

(2)   

Those sections—

(a)   

explain what is meant by income or chargeable gains being

“remitted to the United Kingdom” (sections 809K to 809N),

15

(b)   

provide for the calculation of the amount remitted (section

809O),

(c)   

contain rules for attributing transfers from mixed funds to

particular kinds of income and capital (sections 809P and

809Q),

20

(d)   

contain further provision in relation to certain foreign

chargeable gains (section 809R), and

(e)   

treat income or chargeable gains as not remitted to the United

Kingdom in certain cases (see sections 809S to 809Y).

809K    

Meaning of “remitted to the United Kingdom”

25

(1)   

An individual’s income is, or chargeable gains are, “remitted to the

United Kingdom” if—

(a)   

conditions A and B are met,

(b)   

condition C is met, or

(c)   

condition D is met.

30

(2)   

Condition A is that—

(a)   

money or other property is brought to, or received or used in,

the United Kingdom by or for the benefit of a relevant person,

or

(b)   

a service is provided in the United Kingdom to or for the

35

benefit of a relevant person.

(3)   

Condition B is that—

(a)   

the property, or consideration for the service, is (wholly or in

part) the income or chargeable gains,

(b)   

the property or consideration is—

40

(i)   

property of a relevant person, or

(ii)   

consideration given by a relevant person,

   

that derives (wholly or in part, and directly or indirectly)

from the income or chargeable gains,

(c)   

the income or chargeable gains are used outside the United

45

Kingdom (directly or indirectly) in respect of a relevant debt,

or

 
 

Finance Bill
Schedule 7 — Remittance basis
Part 1 — Main provisions

157

 

(d)   

anything deriving (wholly or in part, and directly or

indirectly) from the income or chargeable gains is used as

mentioned in paragraph (c).

(4)   

Condition C is that qualifying property of a gift recipient—

(a)   

is brought to, or received or used in, the United Kingdom,

5

and is enjoyed by a relevant person,

(b)   

is consideration for a service that is enjoyed in the United

Kingdom by a relevant person, or

(c)   

is used outside the United Kingdom (directly or indirectly) in

respect of a relevant debt.

10

(5)   

Condition D is that property of a person other than a relevant person

(apart from qualifying property of a gift recipient)—

(a)   

is brought to, or received or used in, the United Kingdom,

and is enjoyed by a relevant person,

(b)   

is consideration for a service that is enjoyed in the United

15

Kingdom by a relevant person, or

(c)   

is used outside the United Kingdom (directly or indirectly) in

respect of a relevant debt,

   

in circumstances where there is a connected operation.

(6)   

In a case where subsection (4)(a) or (b) or (5)(a) or (b) applies to the

20

importation or use of property, the income or chargeable gains are

taken to be remitted at the time the property or service is first

enjoyed by a relevant person by virtue of that importation or use.

(7)   

In this section “relevant debt” means a debt that relates (wholly or in

part, and directly or indirectly) to—

25

(a)   

property falling within subsection (2)(a),

(b)   

a service falling within subsection (2)(b),

(c)   

qualifying property dealt with as mentioned in subsection

(4)(a),

(d)   

a service falling within subsection (4)(b),

30

(e)   

qualifying property dealt with as mentioned in subsection

(5)(a), or

(f)   

a service falling within subsection (5)(b).

(8)   

For that purpose, the reference to a debt that relates to property or a

service includes a debt for interest on money lent, where the lending

35

relates to the property or service.

(9)   

If the service mentioned in subsection (2)(b) is the income or

chargeable gains, references in subsection (3)(a) and section 809O(2)

to the property include the service.

(10)   

This section is subject to sections 809S to 809Y (property treated as

40

not remitted to the United Kingdom).

809L    

Section 809K: relevant persons

(1)   

This section applies for the purposes of sections 809K to 809N.

(2)   

A “relevant person” is—

(a)   

the individual,

45

(b)   

the individual’s husband or wife,

 
 

 
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