Remittance basis charge
Written by Ray Coman
An individual who is non-domiciled is not necessarily liable to pay tax on non-UK income and gains. It is possible to pay tax only only on capital brought in, or remitted, to the UK. Once a person has been resident for a number of years, it is a requirement to pay a remittance basis charge in order to preserve this exemption on unremiitted income and gains.
|
Remittance basis charge |
2020-21 | 2019-20 |
| Number of years resident in the UK | £ | £ |
| Less than 7 years | nil | nil |
| 7 out of the last 9 years | 30,000 | 30,000 |
| 12 out of the last 14 | 60,000 | 60.000 |
A non-domcilied individual is broadly a person who is not originally from the UK, but a more complete explanation can be read here. For the first seven years of UK residency, a 'non-dom' is exempt from most UK capital taxes on their overseas assets. After this period however, that person has to pay a charge to retain this exmeption. The charge cancels any tax benefit for all but the wealthiest of non doms. A more complete explanation canbe read in the article on domicile.
A separate system of liability to UK inheritance tax for non-domiclied individuals applies to inheritance tax and on non-UK assets. Liability arising on non-UK wealth can be considered in the table on inheritance tax.
Tax implications of claiming the remittance basis
In additon to the charge a remittance basis user will lose their entitlement to:
- the personal allowance; and
- the capital gains tax allowance.
Individuals will be able to claim a credit for tax suffered at source in the country of origin. Consequently, there is only UK tax to pay to the extent that this exceeds any tax already paid. The following table sets out the UK rate of capital gains tax.
