Accountants guide for Remittance basis, Overseas workday relief
On the basis that the individual coming to the UK is non-domiciled, they will be able to take advantage of the ‘remittance basis’ for taxing overseas income and/or gains.
This topic can conveniently be divided into two areas:
- Overseas workday relief, applicable to certain employment income;
- The remittance basis for other (overseas) income and/or gains.
Overseas workday relief
Where a non-domiciled individual has not been UK resident in previous tax years (or, if UK resident, has been resident for no more than the previous two tax years), general earnings arising in the following tax year which are not in respect of UK duties of the employment, are taxed on the remittance basis only.
Remittance basis generally
For non-domiciled individuals who are not ‘long-term’ residents of the UK (that is, they have been resident for less than seven out of the previous nine tax years), the remittance basis of taxation is available with respect to their other overseas income and their overseas gains, and this can be enjoyed without having to pay the ‘remittance basis charge’ (a sum of £30,000 upwards per tax year).
Where the remittance basis applies, such foreign income and gains are charged for a tax year only on so much of such income or gains as are remitted to the UK in that tax year. The meaning of ‘remitted to the UK’ was significantly tightened up in 2008.
In most cases, the individual has to make a claim for the remittance basis to apply.
There are certain exemptions or reliefs available, in particular ‘Business investment relief’ which was introduced from 2012. This permits monies to be brought into the UK for the purposes of acquiring qualifying business assets, without such amounts counting as ‘remittances’ for tax purposes.
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