1. The Remittance Basisfor UK Taxation

• The new remittance rules & how they are working in practice

2.

Andrew McKenzie-Smart FCCA CTA

• Smart Solutions

A Seminar for theChartered Institute of Taxation Sussex Area Branch 3. Introduction What is the remittance basis?

For UK domiciled individuals

• taxed on an arising basis

For non UK domiciled individuals

• taxed on an arising basis for UK income and gains

• Can claim for their foreign income and gains to be taxed on a remittance basis

Remittance being when the foreign income and gains are remitted directly or indirectly to the UK

Changes made to the remittance basis in from 6 thApril 2008

4. Domicile Now UK Dom Non UK Dom born in US UK Dom But NR (?) Non UK Dom - Father born in Corfu 5. Domicile

A persons domicile is determined by:

Where they were born

Their fathers domicile position

By marriage

By choice

Deemed Domicile

Arises when an individual has been resident in the UK for 17 out of 20 tax years

Is a Inheritance Tax concept only does not apply to Capital Gains or Income Tax

Is difficult to change and involves long term lifestyle decisions 4 6. F oreign Income & Gains

Foreign Income is:

Profits from trades carried on wholly overseas

Interest on foreign bank accounts and securities

Dividends from Non UK Resident Companies

Rental income from Foreign Property

Employment income from foreign companieswhere the duties are undertaken overseas

Foreign Gains:

Gains on overseas property

Gains on shareholdings in foreign companies

Gains on other assets held offshore

3.1/3.1.1/3.12/3.13 7. Remittance Basis Qualifying Individuals

Tax status

UK Resident, Ordinarily Resident & UK domiciled

UK Resident & domiciled not Ordinarily Resident in UK

UK resident but not UK domiciled

UK income and gains always taxed an arising basis

Worldwide income & gains on an arising basis Arising basis for worldwide gainsRemittance basis available for offshore income Remittance basis available for offshore income and gains 3.2 8. Remittance Basis Claim needed?

It depends on:

Less than 2,000 of unremitted income and gains?

• • s809D [5.1]

S 809 E exemption?

• Under 18 at the end of the tax year?

• Not resident in the UK for more than 6 out of 9 preceding tax years

Or eligible for the s828C exemption? [income if taxed in the UK would be subject to basic rate tax and they are employed in the UK]

9. Remittance Basis Claim needed? (2)

s828C exemption applies to

• basic rate UK tax residents but non UK domiciled

• If all income were subject to UK tax then no higher rate tax liability would arise

• No UK income tax return required

• UK employment income

• No foreign gains

• Small amounts of foreign employment income (