Finance Bill

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Jane Kennedy: We have been clear from the outset that it is unfair for a remittance basis user to continue to have the double benefit of the remittance basis and UK personal allowances. We have responded to concerns that remittance basis users with small amounts of overseas income or gains would be adversely affected by the loss of the personal allowances, by raising the limit above which a remittance basis user would lose that personal allowance from £1,000 to £2,000 of unremitted overseas income and gains. Above that level, people who do not want to lose their personal allowances can choose to be taxed on the arising basis like the majority of UK taxpayers. We believe that that strikes the right balance. We do not believe that it will be an extra burden on employers, because it will all be done through self-assessment.
I note the hon. Gentleman’s point that some employers may have concerns for their employees, and I will give the matter some thought. However, I do not believe that it will be a burden for employers. It is technically possible for a small number of our double taxation treaties to prevent the removal of the personal allowances when an individual claims the remittance basis. In practice, however, the circumstances would be very unusual. The individual would have to be treated as resident in both the UK and another country during the year, the double taxation agreement would have to treat them as treaty resident in the other country, and they would have to have certain sorts of investments in order to make it worth their while to claim the remittance basis. As a result, we anticipate that the number of people to whom this applies will be tiny. Those who do benefit will still be liable for the £30,000 charge.
Mr. Hoban: Are any of those potentially troublesome treaties ones which the UK has with A8 states?
Jane Kennedy: There are 16 double taxation agreements. If it would be helpful to the Committee, I will establish which countries those 16 apply to and return with that information after our break.
Individuals have a choice. If they want to claim the remittance basis, they will lose their personal allowances and the annual exempt amount. No one will be forced to claim the remittance basis. Individuals need to make a decision on whether or not to claim, based on their own circumstances.
It being twenty-five minutes past Ten o’clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.
Adjourned till this day at One o’clock.
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