Posted by Nick Day on 25 Apr 2012

The UK Remittance Basis Charge (RBC) applies to non-domiciled individuals who are UK tax resident for a number of years and wish to claim the “remittance basis” of taxation rather than the “arising basis” of taxation. Under the remittance basis, individuals pay UK tax only on non-UK income/gains remitted to or brought to the UK. Under the arising basis, full UK tax is paid on all income/gains, whether UK sourced or non-UK sourced.

The RBC has been set at £30,000 per individual per tax year since its introduction for the 2008-09 year, where someone has been UK tax resident for seven out of the nine previous UK tax years.

From April 2012 (i.e. for the 2012/13 tax year onwards), the RBC will be increased to £50,000 per individual per tax year for longer term UK tax residents that have been resident in the UK in at least twelve of the previous fourteen UK tax years.

In summary, from 2012/13, two different RBCs can apply, depending on the length of time an individual has been a UK tax resident:

  • The £30,000 RBC will apply if the remittance basis is claimed and the individual has been UK tax resident in at least seven of the previous nine UK tax years, and
  • The £50,000 RBC will apply if the remittance basis is claimed and the individual has been UK tax resident in at least twelve of the previous fourteen UK tax years.

The RBC cannot apply to individuals under the age of eighteen, but periods in which the individual is UK tax resident while less than eighteen are considered in determining the RBC to apply once an individual reaches their eighteenth birthday.

Individuals wishing to claim the remittance basis need to nominate foreign income/gains against which to pay the RBC. This is a complex process and we would urge you to contact us for advice if you are unsure of any aspect. If you nominate non-UK income rather than capital gains this can increase the level of the “payments on account” you will need to make in advance of settling your final UK tax liability each year.

For advice or a free initial consultation with us, please contact us on 01962 856 990 or customerservice@taxinnovations.com.