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Tax on Remmittance Basis

What is Tax on Remittance Basis?

The remittance basis of taxation is a tax treatment available to UK residents who are non-domiciled. Under this system, individuals are only taxed on the income and capital gains they bring (remit) into the UK. Income and gains that are earned outside the UK but not brought into the country are not subject to UK tax. This offers significant tax advantages for individuals with foreign income or assets, allowing them to avoid UK tax on overseas earnings. Our expert tax advisors provide guidance on utilizing the remittance basis effectively to optimize tax liabilities.

Why is Tax on Remittance Basis Important?

The remittance basis of taxation is an important tool for non-domiciled individuals to manage their tax liabilities, particularly when they have significant foreign income or assets. It can result in substantial tax savings if the income or gains remain outside the UK. However, the remittance basis has specific rules and conditions, including an annual charge for long-term residents. Understanding the benefits and potential drawbacks is essential for making the most of this tax regime.

Benefits of the Remittance Basis

  • Offers tax relief on foreign income and gains not brought into the UK
  • Allows for more control over when and how foreign income is taxed
  • Helps non-domiciled individuals manage their UK tax liabilities more effectively
  • Potential tax savings on overseas assets

Considerations for Using the Remittance Basis

  • Annual charge for long-term UK residents using the remittance basis
  • Strict rules on what constitutes "remitting" income to the UK
  • Restrictions on certain types of income, such as dividends and interest
  • Potential loss of tax-free allowances for UK income

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Tax Advisors is a leading UK-based tax consultancy powered by a team of Chartered Tax Advisors (CTA), Chartered Accountants, and Former HMRC Inspectors. With decades of combined experience, we specialize in providing expert tax solutions tailored to individuals, businesses, and organizations’ unique needs.

  • At Tax Advisors, we combine technical expertise with a client-focused approach, ensuring every solution we provide is aligned with your financial goals.
  • Trust us to transform tax challenges into opportunities for growth and success.

Our team's deep understanding of the UK tax system

Our team’s deep understanding of the UK tax system and proactive approach allow us to deliver tailored solutions that ensure compliance and optimize your tax position. Whether navigating complex cross-border tax issues, seeking to minimize your tax liabilities, or facing an HMRC investigation, we provide the clarity, confidence, and results you need

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Key Features of Tax on Remittance Basis

The remittance basis provides non-domiciled UK residents with flexibility in how they are taxed on their overseas income. While it can be beneficial, it’s essential to understand the rules and thresholds involved. Our tax advisors can help you navigate the complexities of this system, ensuring that you comply with all requirements and maximize your tax savings.
Annual Charge for Long-Term Residents:
Non-domiciled individuals who have lived in the UK for at least 7 out of the last 9 years are subject to an annual charge when using the remittance basis.
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This charge can range from £30,000 to £60,000, depending on the length of residency in the UK.
Tax-free foreign income:
Non-domiciled individuals are not taxed on foreign income unless it is brought into the UK, making this an attractive option for those with international assets.

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Tax Advisors FAQs

Frequently asked questions

  • Who is eligible for the remittance basis of taxation?

    The remittance basis is available to UK residents who are non-domiciled. To qualify, you must
    meet specific residency criteria and not be deemed domiciled in the UK

  • What is considered "remitting" income?

    “Remitting” income means bringing it into the UK, whether in cash or in the form of goods or
    services. Income can also be considered remitted if it is used to settle UK expenses or debts.

  • What are the tax implications of using the remittance basis?

    Using the remittance basis can allow you to avoid tax on foreign income not brought into the
    UK. However, this option can result in the loss of UK tax-free allowances for domestic income.

  • Can I switch between the remittance basis and the arising basis?

    Yes, individuals can choose to switch between the remittance basis and the arising basis of
    taxation. However, there are tax consequences and requirements for each choice, so it’s
    important to seek professional advice.

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