Chapter 40 the remittance basis charge

Question 1

remittance basis charge

Answer 1

The remittance basis charge applies if an individual has made a claim for the remittance basis and is over 18, has been resident in the UK for at least 7 of the previous 9 tax years. Such individuals only use the remittance basis if they agree to pay a tax charge of £30,000 per tax year. A higher remittance basis charge of £60,000 can apply if the individual has been resident in the UK for at least 12 of the previous 14 tax years. The election to use the remittance basis can change year on year. the remittance basis charge does not apply to:
• Non-domiciled taxpayers who have unremitted foreign income and gains of less than £2,000 per annum
• Taxpayers who have not been resident in the UK for seven or more of the last nine years. These individuals can claim to use the remittance basis for foreign income without any tax penalty
• Taxpayers under the age of 18 at the end of the tax year
Nominating income or gains – if a taxpayer is liable to pay the remittance basis charge, he must nominate the income or gains to be subject to the charge. The nominated income is treated as being taxable in the UK on an arising basis in such a way so as to generate a tax charge of £30,000 or £60,000. Nominated income and gains are not taxed if they are subsequently remitted to the UK.