PT 53 - The Remittance Basis Charge Flashcards
If the remittance basis is claimed, a remittance basis charge (RBC) applies if….
a person is over 18 and has been resident in the UK for at least seven of the previous nine tax years.
If individuals who have been resident for 7/9 tax years use remittance basis they must pay an RBC of….
£30,000 per tax year
The RBC is in addition to any tax on foreign income actually remitted in the year.
If individuals who have been resident for 12/14 tax years use remittance basis they must pay an RBC of….
£60,000 per tax year
The RBC is in addition to any tax on foreign income actually remitted in the year.
Split year for RBC?
There is no ‘split year’ rule for the RBC. If the individual is UK resident for any part of the tax year, they are potentially liable to the charge.
If the RBC is paid directly to HMRC from an offshore source…
this will not constitute a remittance.
From a planning perspective, the amount should be transferred from an income source or a mixed fund.
Individuals must nominate….
income or gains to be subject to the RBC.
If, for example, the individual is an additional (45%) rate taxpayer in the UK, the RBC works
by pretending that £66,667 of unremitted income is taxable in the UK on an arising basis at 45%. This will generate a ‘tax charge’ of £30,000.
A nomination of £1 of foreign income is sufficient as the legislation ‘tops up’ the tax to the required amount as appropriate
If the nominated income is ever actually remitted to the UK…
it is not taxable (because the
same income has already been ‘taxed’ in the UK by means of the RBC).
Taxpayers should not remit nominated income because:
- Ordering rules treat nominated income as being remitted after all other unremitted
income and gains. - All unremitted income and gains are then deemed to form one ‘special mixed fund’
and remittances from this ‘special mixed fund’ will thereafter be deemed to be made
in an order which is unfavourable to the taxpayer.
There’s an exception if under £10
