RDRM32340 | Remittance Basis: Accessing the remittance basis: Remittance Basis Charge - Nomination of foreign income and gains: Relevant tax increase - Example 1

From 6 April 2025 it is not possible to use the remittance basis of taxation, however, any foreign income or gains that have arisen to a former remittance basis user prior to this date will continue to be taxed at the usual tax rates if they are remitted to the UK on or after 6 April 2025, subject to any amounts designated under the temporary repatriation facility (TRF) – see RDRM71000.

The guidance in this section only applies to tax years up to and including the 2024-25 tax year and remains for reference purposes only.

Example 1

Paulo, a non-domiciled long-term UK resident makes a claim to use the remittance basis in 2015. He is a higher rate taxpayer (40%). He has UK-source employment income of £40,000.

His foreign income and gains for the year are as follows:

Relevant foreign earnings (France) £40,000

Relevant foreign income (Spain) £60,000

Relevant foreign income (France) £15,000

Foreign chargeable gains (Germany) £80,000

Paulo nominates £60857 of his foreign chargeable gains, and £30,000 of his Spanish RFI, and £12,600 of his French RFI.

To determine the relevant tax increase we must complete two calculations. The first calculation (a) is of the total amount of Paulo’s income tax and capital gains tax actually payable in the year, as a remittance basis user and RBC payer.

The second calculation (b) is the total amount of Paulo’s income tax and capital gains tax payable in the year less the tax charged less the tax charged on the nominated income and nominated gains.

The relevant tax increase is the total of calculation (a) minus calculation (b)

Calculation (a)

Non-savings income (1)

• £31,865 x 20% = £12,746

• £8,135 x 40% = £3,254

Savings income (1)

• £42,600 x 40% = £12,960 (on nominated RFI (2))

Capital gains (1)

• £60,857 x 28% = £17,040 (on nominated CG(2))

Total income tax and CGT due £46,000 (3)

Calculation (b)

Non-savings income (1)

• £31,865 x 20% = £12,746

• £8,135 x 40% = £3,254

Total income tax due £16,000 (3)

Relevant tax increase:

• is total (a) £46,000

• less total (b) £16,000

• equals £30,000

Notes

1. Rates used here for the purposes of this example only; use the rates applying in the relevant tax year.

2. This is the foreign income and gains that are nominated, and which are thus charged to tax on the arising basis in the year

3. As a remittance basis user, Paulo has no personal allowances due