Remittance Basis Rule Changes

On 17 June HMRC released the Consultation Document (ConDoc) on the proposed amendments to the taxation of Remittance Basis Users (RBU’s). If enacted, the amendments will be effective from 6 April 2012. The proposals are in three specific areas.

  • Increasing the Remittance Basis Charge to £50,000 for some RBUs
  • Simplifying some of the existing rules relating to remittances
  • Introducing an exemption for using overseas funds to invest in UK businesses

Remittance Basis Charge

The increase of the Remittance basis charge will apply to any RBU who has been resident in the UK for at least 12 out of the last 14 tax years prior to the year of claim. All other aspects of the charge remain in place.    

Simplifying the Rules

The simplification proposals are a mixed bag. These include the following:-

  1. The first £10 of nominated income can now be remitted tax free. 
  2. All Foreign Currency Bank Accounts are now exempt  from CGT. 
  3. Statement of Practice SP 1/09 is to be given a statutory base. 
  4. Assets brought to the UK solely for sale will not be a remittance if the funds are “exported” within two weeks and purchaser retains the asset in the UK.

Investing in the UK

Finally, HMRC is introducing investment relief for any remittance that is made for the sole purpose of investing into a company which is conducting a qualifying business in the UK. There is no limit to the amount that can be invested nor is there any restriction in the form of investment, which can be equity, loan or a combination of the two. Further the investment can be made direct by the RBU or through their offshore company or trust structure.

 

Gabelle specialises in assisting accountants understand and navigate the complex tax legislation affecting non-UK domiciled and internationally mobile clients. Please contact Paul Bramall on 020 7182 4747 or via email on paul.bramall@gabelletax.com