PT 52 - Remittances and Mixed Funds

Question 1

A remittance is…

Answer 1

any money or other property which derives from offshore income and gains which is brought to the UK.

Question 2

What else is treated as a remittance?

Answer 2

An asset brought to the UK which is acquired from foreign income or gains

Question 3

There is no remittance if

Answer 3

‘exempt property’ is brought to, used or enjoyed in the UK.

Question 4

A taxable remittance will arise if money or other property representing a person’s foreign income or gains is brought to the UK by any ‘relevant person’. ‘Relevant persons’ include

Answer 4

the spouse/civil partner and minor children or grandchildren.

Question 5

Where a taxpayer gives foreign income or gains to a non-relevant person (a ‘gift recipient’) and that person brings that money to the UK…

Answer 5

there is usually no remittance. A
remittance will, however, occur if the taxpayer (or a relevant person) is able to enjoy or benefit from the money brought to the UK by the gift recipient.

Question 6

A taxable remittance occurs where foreign income and gains are used to either…

Answer 6

repay the capital or pay the interest on a ‘relevant debt’.

Question 7

There is no remittance where foreign income or gains are used to…

Answer 7

pay interest (not capital repayments) on pre-12 March 2008 offshore mortgages on UK residential property.
Protection will end on 5 April 2028 (or when the mortgage ends if before that date).

Question 8

Remittances need to be identified as either …

Answer 8

income or chargeable gains before they can
be taxed in the UK. No charge arises where clean capital is remitted to the UK.

Question 9

A mixed fund is normally…

Answer 9

an offshore bank account containing either different sources or sources from different tax years.

Question 10

Where money is brought to the UK from a mixed fund, statutory ordering rules determine the nature of the remittance. Under these rules …

Answer 10

the amount remitted is deemed to come from income or gains from the current tax year in
priority to earlier years, and (in essence) from income in priority to capital gains

Question 11

An asset could also constitute a mixed fund if it has been purchased using different
sources of money. What are the implications?

Answer 11

On a sale of that asset, the mixed fund ordering rules will then apply if the proceeds are brought to the UK.