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View the related Tax Guidance about Remittance

Automatic remittance basis

Automatic remittance basisSTOP PRESS: The remittance basis is to be abolished from 6 April 2025, although this only applies to foreign income and gains arising on or after that date. The remittance basis rules still apply to unremitted income and gains arising before that date but remitted later. The legislation is included in Finance Bill 2025. For more details, see the Abolition of the remittance basis from 2025/26 guidance note.Before reading this note, it is recommended that you read the Remittance basis ― overview guidance note to familiarise yourself with the wider remittance basis regime.Most individuals who choose to use the remittance basis have to make a claim under ITA 2007, s 809B. See the Remittance basis ― formal claim guidance note.However, in three cases, the remittance basis is given automatically. These are where, in relation to a given tax year, the individual meets any of the following tests:•they have unremitted foreign income and gains totalling less than £2,000•they are under 18 at the end of the year, have no more than £100 of UK taxed investment income, and no other UK taxable income, and do not remit any relevant income or gains to the UK *•they have been resident in the UK for not more than six out of the last nine years, have no more than £100 of UK taxed investment income, no other UK taxable income, and do not remit any relevant income or gains to the UK ** Note that these latter

Payment of the remittance basis charge

Payment of the remittance basis chargePrior to 6 April 2025, UK resident individuals who were not domiciled or deemed domiciled in the UK had the choice to pay tax on the remittance basis (meaning UK tax was only paid on foreign income and gains to the extent that these were brought to the UK in the tax year) or the arising basis (meaning UK tax was payable on worldwide income and gains arising in the tax year). See the Remittance basis ― overview guidance note.From 6 April 2025, the remittance basis of taxation is abolished. This is replaced with a regime linked to the number of years of UK residency called the foreign income and gains regime (FIG regime). This regime is to be open to anyone who meets the residence conditions, including those who would otherwise be considered to be UK domiciled. See the Abolition of the remittance basis from 2025/26 guidance note. The guidance below relates to the remittance basis charge due in relation to tax years prior to 6 April 2025. This remains relevant after this date as:•the second payment on account and balancing payment deadlines for the 2024/25 tax year fall after this date. See the Self assessment ― payments on account guidance note.•the deadline for claiming the remittance basis is four years from the end of the tax year, so it could be that a claim is made after 6 April 2025 in relation to an earlier year that necessitates payment of

Remittance basis ― overview with employment focus

Remittance basis ― overview with employment focusSTOP PRESS: At Spring Budget 2024, the Chancellor announced that the remittance basis would be abolished from 6 April 2025, although this only applies to foreign income and gains arising on or after that date. The remittance basis rules still apply to unremitted income and gains arising before that date but remitted later. For more details, see the Abolition of the remittance basis from 2025/26 guidance note.Key points•provided certain conditions are met, Overseas Workday Relief (OWR) can be an extremely valuable form of tax relief for non-domiciled individuals who perform employment duties both in the UK and overseas•OWR is only available in the tax year of arrival and subsequent two tax years following a three year period of non-residence•OWR is generally calculated by reference to the percentage of days an individual spends working overseas•a bank account which qualifies for the special mixed fund rules allows for all offshore transfers to be treated as one single transfer for the year and all remittances as one single remittanceIntroduction ― the remittance basisThe default position for employees who are resident in the UK for tax purposes is that they are chargeable to income tax on their worldwide income and gains. Where an individual is not domiciled in the UK, they may be eligible to claim the remittance basis of taxation. For an individual who has been UK resident for a number of years, there are additional rules which may deem them to

Remittance basis ― nomination, charge and payment

Remittance basis ― nomination, charge and paymentSTOP PRESS: At Spring Budget 2024, the Chancellor announced that the remittance basis would be abolished from 6 April 2025, although this only applies to foreign income and gains arising on or after that date. The remittance basis rules still apply to unremitted income and gains arising before that date but remitted later. For more details, see the Abolition of the remittance basis from 2025/26 guidance note.The Remittance basis ― formal claim guidance note explains who can make an election for the remittance basis, and the consequences of making the election. You are advised to read that guidance note first.This note covers the machinery of the remittance basis charge (also referred to as the RBC), including nomination and payment.An outline of the remittance basis can be found in the Remittance basis ― overview guidance note. A discussion of what is meant by a remittance can be found in the When are income and gains remitted? guidance note.Remittance basis chargeIndividuals who have been resident in the UK for at least seven out of the previous nine tax years and who are over the age of 18 have to pay an annual charge to use the remittance basis. These are known as long-term residents. The amount of the charge depends on the length of time the individual has been resident in the UK:Period of UK residenceTax years in forceAmount of remittance basis charge per tax yearAt

Ordinary residence — issues on leaving the UK up to 5 April 2013

Ordinary residence - issues on leaving the UK up to 5 April 2013STOP PRESS: The remittance basis is to be abolished from 6 April 2025, although this only applies to foreign income and gains arising on or after that date. The remittance basis rules still apply to unremitted income and gains arising before that date but remitted later. The legislation is included in Finance Bill 2025. For more details, see the Abolition of the remittance basis from 2025/26 guidance note.IntroductionOrdinary residence was abolished from 6 April 2013. There are transitional provisions for up to three years for those who are not ordinarily resident in the UK and are adversely affected by the changes. You should consider this when advising on this subject.This guidance note considers the application of the ordinary residence to people leaving the UK in the tax years up to 5 April 2013.The tax rules on UK ordinary residence are explained in the Ordinary residence - years to 5 April 2013 guidance note, and it is recommended that you read that note first. The transitional rules are discussed in the Ordinary residence - transitional rules (2013/14 to 2015/16) guidance note.You may also find the Residence - issues on leaving the UK up to 5 April 2013 guidance note

Pre-owned chattels

Pre-owned chattelsSTOP PRESS: The remittance basis is to be abolished from 6 April 2025, although this only applies to foreign income and gains arising on or after that date. The remittance basis rules still apply to unremitted income and gains arising before that date but remitted later. The legislation is included in Finance Bill 2025. For more details, see the Abolition of the remittance basis from 2025/26 guidance note.This guidance note considers the pre-owed asset tax (POAT) as it applies to chattels, where an individual has made a gift, or funded the purchase of a chattel, from which they now benefit. It applies to disposals since March 1986.Chattels include, for example, paintings, antiques, furniture, vehicles, boats, racehorses, jewellery, musical instruments, computers, wines and spirits and collectible items.For discussion of the regime generally, see the Pre-owned asset tax overview guidance note.Chattels are defined as ‘any tangible moveable property (or, in Scotland, corporeal moveable property) other than money’. The conditionsThe residence and domicile conditionsIn order for pre-owned asset tax (also known as POAT) to apply to the individual for any tax year, they must be resident in the UK during that year, see the Residence ― overview guidance note. Where the individual is UK resident but is domiciled outside the UK, the pre-owned asset tax applies only if the asset is situated in the UK. For this purpose, a person is domiciled in the UK at any time if they would be domiciled, or treated as domiciled, in the UK under

NIC settlements for inbound employees with UK employer

NIC settlements for inbound employees with UK employerSTOP PRESS: The remittance basis is to be abolished from 6 April 2025, although this only applies to foreign income and gains arising on or after that date. The remittance basis rules still apply to unremitted income and gains arising before that date but remitted later. The legislation is included in Finance Bill 2025. For more details, see the Abolition of the remittance basis from 2025/26 guidance note.HMRC offers two arrangements that relax the strict PAYE procedures in respect of NIC. One of these is the modified NIC arrangement covering inbound employees who are ordinarily resident and domiciled outside the UK, but who have been sent to work with a UK employer or host employer, known as an ‘EP Appendix 7A ― Modified Class 1 and Class 1A National Insurance contributions for expatriate employees subject to an EP Appendix 6 agreement’ (EP APP 7A). The EP APP 7A application form for employers to complete who operate a tax equalisation agreement for employees coming to work in the UK from abroad is available at PAYE82003.Scope of agreementAs the name suggests, this arrangement can only apply to employees who are included in an EP Appendix 6 Modified PAYE agreement. This means that in order for an EP Appendix 7A agreement to apply the employee must be a foreign national assigned to the UK who is tax equalised (see the Tax equalisation guidance note) and has an employer or host employer in the UK liable

Non-domiciled and deemed domiciled beneficiaries

Non-domiciled and deemed domiciled beneficiariesIntroductionThe current tax position of non-domiciled and deemed domiciled beneficiaries of non-resident trusts is a complex landscape mapped by successive changes in the law. Before 2008, UK resident but non-domiciled beneficiaries were protected by a cost-free remittance basis option for income tax and, like non-domiciled settlors, they were exempt from attribution of capital gains within the trust. Major changes in 2008, 2017 and 2018 have incrementally brought non-domiciles into the regime under which UK domiciled beneficiaries of non-resident trusts are taxed.Changes introduced in 2008 scaled down some of the advantages of long-term non-domiciled status. The remittance basis charge was introduced to impose a cost on accessing the benefits of the remittance basis. See the Remittance basis ― overview guidance note in the Personal Tax module. At the same time, changes were made to the taxation of non-domiciled beneficiaries of non-resident trusts to bring their benefits from the trust within the scope of capital gains tax.Notwithstanding the imposition of a charge for the use of the remittance basis, public and political opinion continued to oppose the non-domiciled advantage. As a result, Finance (No 2) Act 2017 introduced the concept of deemed domicile for income tax and capital gains tax for the first time. Long-term residents of the UK, and those who were originally UK domiciled, can no longer benefit indefinitely from the remittance basis. Once they satisfy the conditions for deemed domicile, they become taxable on their worldwide income and gains.In conjunction with the introduction of

File management

File managementWhilst administering an estate it is extremely important to be able to locate all documents and correspondence received, make sure deadlines are recorded and met, and to know what stage you are at all times. The beneficiaries should be kept informed and updated regularly.Keeping track of documents and correspondenceThe administration of an estate can generate a huge amount of documentation. Obviously, the amount of paperwork varies according to the complexity and range of assets, liabilities and beneficiaries. Nevertheless it is advisable to adopt a consistent outline structure for record keeping which can be applied to each estate.Unless the estate is very simple, it is not advisable to simply file documents and correspondence in date order. You will need to refer to documents throughout the administration, and they will become increasingly difficult to find if the file is not organised in a segmented way. The aim is to keep all the documents on a particular asset or liability together, so that the ‘story’ for each asset etc. is quickly ascertained at any point, particularly when it comes to preparing the estate accounts.See the Table ― probate file index for a suggested file structure.There are some advantages to a chronological file, and practitioners may be reluctant to abandon such a system if that is what they use with their other paper files. If so, it is recommended that both a chronological file and a subject segmented file is kept with duplicates of essential documents such as valuation letters, remittance advices,

Introduction to capital gains tax

Introduction to capital gains taxIn general terms, a charge to capital gains tax arises when a chargeable person makes a chargeable disposal of a chargeable asset. The disposal may produce a profit (known as a gain) or a loss.See Checklist ― calculation of capital gains and losses for issues to consider when reporting client gains and losses.A number of changes to capital gains tax rates for individuals were announced in Autumn Budget 2024:•the rates that apply to most assets increased from 10% to 18% and from 20% to 24% for disposals taking place from 30 October 2024 onwards•carried interest subject to capital gains tax is to be taxed at a flat rate of 32% in the 2025/26 tax year irrespective of the individual’s unused basic rate band and will be subject to income tax from 2026/27 onwards•the rates that apply to gains subject to business asset disposal relief and investors’ relief are to be increased from 10% to 14% for disposals in the 2025/26 tax year and to 18% for disposals from 2026/27 onwardsTolley’s Finance Bill Tracking Service, Finance Bill 2025, cl 7–9, 12Chargeable personA chargeable person could be an individual, a trustee, a personal representative or a company, although companies are subject to corporation tax on chargeable gains not capital gains tax. For further discussion, see CG10700 and Simon’s Taxes C1.102. Exempt persons include, amongst others, charities (so long as the gain is applicable and applied for charitable purposes) and local authorities. See CG10760P.Gains arising