Foreign Income 01 - If you are making a claim for the remittance basis

Some people are able to claim an alternative basis of calculating the amount of tax due. This is known as the remittance basis.

The remittance basis is an alternative tax treatment that is available to people who are a resident, a person who lives somewhere permanently or on a long-term basis, in the UK and who are either:

• not domiciled, treat a specified country as a permanent home, in the UK
• not ordinarily resident in the UK

Remittance basis taxpayers are liable to UK tax in the ordinary way on their UK source income and gains. But they are only liable to UK tax on any amounts of foreign income and gains that are remitted to the UK.

Note 1: You can claim to be taxed on the remittance basis on your foreign gains only if you are a resident but not domiciled in the UK.

Note 2: If you used the remittance basis in an earlier tax year, any foreign income or gains of that year that you later remit are taxable in the year that you remit them regardless of whether you use the arising basis or the remittance basis for that tax year.

Note 3: The remittance basis does not apply to chargeable event gains under a policy of life insurance, life annuity or on a capital redemption policy. These are taxable on the full amount arising in the year irrespective of whether they are remitted to the UK or not.

Information about residence, domicile and the remittance basis of taxation can be found in booklet RDR1 Guidance Notes: Residence, Domicile and Remittance Basis.

HMRC strongly recommends that you read booklet RDR1, in particular Chapter 9, before you make any decision about claiming the remittance basis of taxation.

For more information about paying tax on the remittance basis, go to Helpsheet 264 - Remittance basis. You will need to complete the Residence, Remittance Basis etc pages (SA109). You cannot however file these supplementary pages online using this free HMRC service. Instead if you want to file your tax return online, you will need to exit this service and purchase alternative software.

Choosing a commercial supplier.