RDRM33040 | Remittance Basis: Identifying Remittances: Overview of identifying a remittance: Relevant debt - definition

Broadly, a ‘relevant debt’ is any debt that relates, directly or indirectly, to money or property brought to, received or used in the UK by or for a relevant person. The debt may also relate to a service provided in the UK in similar circumstances.

The relevant debt provisions cover both the principal amount borrowed and the interest paid to service that debt.

A relevant debt includes any debt for money lent where the lending relates to property or to a service that is dealt with under:

• Conditions A and B (see RDRM33120) - a debt that relates (wholly or in part, directly or indirectly) to property (including money) or a service - see section 809L(2)(a) and (b) ITA 2007

• Condition C (see RDRM33220) – ‘qualifying property’ or a service where an individual makes a gift of property - see section 809L(4)(a) and (b) and section 809N ITA 2007

• Condition D (see RDRM33420) - a ‘qualifying disposition’ linked to property or a service where there is a connected operation - see section 809L(5)(a) and (b) and section 809O ITA 2007

Where foreign income and gains are used as collateral on a loan and the borrowed money is brought to the UK or otherwise used for a purpose to which section 809L ITA 2007 applies, the foreign income and gains are treated as used ‘in respect of’ the relevant debt, so there may be a taxable remittance at this point. For further information on the use of collateral in respect of a relevant debt see RDRM33170.

Where the debt is a mortgage loan taken out on UK residential property before 6 April 2008, refer to the transitional provisions at RDRM31400 onwards.