What is the remittance basis of taxation?

Under the remittance basis of taxation, you pay UK tax on UK income and gains for the tax year in which they arise, but you only pay UK tax on foreign income and foreign gains if and when they are brought (or ‘remitted’) to the UK. In practice, the remittance basis can help to prevent double taxation.

What is claiming remittance basis mean?

Claiming the remittance basis means you only pay UK tax on the income or gains you bring to the UK, but you: lose tax-free allowances for Income Tax and Capital Gains Tax (some ‘dual residents’ may keep them) pay an annual charge if you’ve been resident of the UK for a certain amount of time.

What is clean capital for remittance basis?

The expression “clean capital” signifies that this is money which can be remitted to the UK without tax consequences. Most commonly this will be foreign income and gains that arose before you became UK resident, but it can also include outright gifts and monies received by way of inheritance.

Who pays the remittance basis charge?

The remittance basis charge may be paid from outside the UK direct to HMRC by a person other than the individual (eg by an employer on behalf of an employee). If the employer makes the payment on the employee’s behalf, the amount of the remittance basis charge paid to HMRC may form part of the taxpayer’s income.

How does remittance basis work?

The remittance basis is an alternative tax treatment that’s available to individuals who are resident but not domiciled in the UK and have foreign income and gains. If you’re taxable on the remittance basis, you’re liable to UK tax in the normal way on your UK source income and gains.

How does the remittance basis work?

When can you claim remittance basis?

Remittance basis is not available if you’re deemed domicile in the UK. You’ll be deemed domicile if you were born in the UK with UK domicile of origin and UK resident in 2018 to 2019 tax year, or you’ve been UK resident for at least 15 of the previous 20 tax years and UK resident in 2018 to 2019 tax year.

What is a nil report?

What’s a nil return? A nil income tax return is filed to show the Income Tax Department that you fall below the taxable income and therefore did not pay taxes during the year.