Remittance basis of taxation

Introduction

Under the remittance basis of taxation for tax years up to and including 2024/25, you pay UK tax on UK income and gains for the tax year in which they arise, but you only pay UK tax on foreign income and foreign gains if and when they are brought (or remitted) to the UK. In practice, the remittance basis can help to prevent double taxation.

The remittance basis is only available (for tax years up to and including 2024/25) if you are resident but not domiciled in the UK. From 2017/18 to 2024/25 inclusive, if you meet certain conditions, then even if you are resident and not domiciled in the UK you may be ‘deemed UK domiciled’. In this case, the remittance basis of taxation cannot apply.

If you are resident and non-domiciled in the UK (and not deemed domiciled in the UK), then the remittance basis may apply for tax years up to and including 2024/25 either:

• automatically, in certain cases, or
• upon making a claim.

Therefore, the first step is to understand whether your circumstances mean that the remittance basis applies automatically. If not, then you should decide whether you wish to claim the remittance basis – this can carry a financial cost. See below for more information on when the remittance basis applies automatically, and the effect of making a claim.

Note that if you are employed in the UK with a small amount of foreign earnings or income which is taxed at source, the foreign workers’ exemption can apply. This would mean your foreign earnings are exempt from UK tax, without needing to claim the remittance basis.

Automatic remittance basis

For tax years up to and including 2024/25, the remittance basis can apply automatically (that is, without a claim) in the following situations:

Unremitted foreign and gains less than £2,000

If you are not domiciled in the UK, the remittance basis applies automatically for tax years up to and including 2024/25 to those who have unremitted foreign income or gains of less than £2,000 in a tax year.

In this instance:

• The remittance basis applies without making a claim – this means you pay UK tax on your UK income and gains, and on any foreign income and gains that you remit (that is, bring) to the UK.
• You will not have to pay the remittance basis charge (see below).
• You will continue to be entitled to UK tax allowances, including the personal allowance for income tax and the annual exempt amount for capital gains tax.

Even though the remittance basis applies automatically in this situation, if possible you should still complete the SA109 ‘Residence, remittance basis, etc.’ pages of your tax return to declare your non-domicile status and state that the remittance basis applies automatically. In accordance with HMRC’s guidance notes, you should ensure boxes 28 and 29 of page RR2 on the paper return are ticked (even though box 28 refers to making a ‘claim’ to the remittance basis).

However, if you are filing your tax return online through HMRC’s online portal, you will be unable to complete these pages of your tax return. If you are unable to file your return by alternative means, you may wish to add the following note to your return:

“I am non-domiciled in the UK for [tax year] and I first came to the UK on [date]. My unremitted foreign income and gains for [tax year] are less than £2,000. Please note that, owing to a limitation in HMRC’s software, I am unable to complete the SA109 pages to show that the remittance basis applies automatically under section 809D of Income Tax Act 2007.”

If the remittance basis applies automatically because your unremitted foreign income and gains are less than £2,000, you will still need to pay UK tax on foreign income and gains which have been remitted to the UK. A foreign tax credit may be applicable in this situation.

There may be limited circumstances where it would be beneficial for the arising basis to apply instead. In this instance, it is possible to elect to disapply the remittance basis.

If split-year treatment applies for a year, then you should ignore foreign income and gains in the overseas part of the year when working out if the £2,000 threshold is exceeded.

No UK income

The remittance basis can also apply automatically for tax years up to 2024/25 if you have very limited UK income. If you satisfy all the following conditions for a particular tax year you can use the remittance basis without making a claim, without losing your allowances and without paying the remittance basis charge (see the relevant heading below):

• You are UK resident.
• You are not UK domiciled.
• You do not have any UK income or gains for that year, other than UK investment income of £100 or less, all of which has been taxed at source.
• You have not remitted any foreign income or gains in that year.
• You have been UK resident in fewer than seven of the immediately preceding nine tax years or you are under 18 for the entire tax year.

This exemption is aimed at individuals who accompany migrant workers to the UK, but who do not work in the UK themselves. It can be useful where unremitted foreign income and gains are more than £2,000 (or if it is difficult to determine the level of unremitted foreign income and gains) because it allows the remittance basis to apply without needing to file a tax return.

Since April 2016, bank interest in the UK is normally paid without deduction of income tax at source and the personal savings allowance has been available. This means that, strictly speaking, an individual would not be able to access the above exemption if they have just £1 of UK bank interest, as it would be paid gross and not be considered ‘investment income which has been taxed at source’. This would be the case even if such bank interest falls within the individual’s personal savings allowance for the year and they do not have to pay tax on it.

However, HMRC have confirmed that if an individual does not have savings income exceeding their personal savings allowance for the year and does not have dividend income exceeding the dividend allowance, they will still be able to access this exemption if they meet the remaining conditions.

Claiming the remittance basis

For tax years up to and including 2024/25, if you are non-domiciled (and not deemed to be UK domiciled) and have more than £2,000 of unremitted foreign income and gains in a year, and your circumstances do not fall into the cases described above, you will be taxed on the arising basis unless you claim the remittance basis.

If you have been resident in the UK for at least seven out of the previous nine tax years, you can only elect to use the remittance basis for tax years up to and including 2024/25 if you pay a charge (see the heading below).

If you elect to use the remittance basis for a year, you must:

• complete a self assessment tax return and make a claim to use the remittance basis on form SA109 ‘Residence, remittance basis, etc.’ of your tax return,
• lose your entitlement to the income tax personal allowance and the annual exempt amount for capital gains tax for that year (there are some double taxation agreements that override UK tax law on this point, but the number of countries concerned are very limited),
• pay UK tax on your UK income and gains arising in the tax year, and
• pay UK tax on the foreign income and gains that you remit (that is, bring directly or indirectly) to the UK, which must be identified.

If you do not claim the remittance basis and it does not apply automatically, you will be taxable on the arising basis. If you have foreign income or gains, you must complete a self assessment tax return and include them. These will be subject to UK tax, but you will keep your UK allowances.

This could mean that you suffer double taxation. However, relief should be available, meaning that overall you are unlikely to end up paying tax twice on the same income or gains. For example, in circumstances where foreign taxes have been paid on the foreign income or gains, a foreign tax credit may be available to reduce or extinguish the UK liability – another consideration when working out whether to claim the remittance basis or not.

  If you find yourself in this position you should take advice from HMRC or a professional adviser.

The remittance basis charge

For tax years up to and including 2024/25, if you are non-domiciled and have been resident in the UK for at least seven out of the previous nine tax years, you will have to pay a minimum £30,000 annual charge (the remittance basis charge) if you claim the remittance basis.

If you are non-domiciled and claiming the remittance basis and have been resident in the UK for at least twelve of the previous fourteen tax years, the remittance basis charge is £60,000.

There used to be a charge of £90,000 for non-domiciled individuals who claimed the remittance basis and had been resident in the UK for seventeen of the past twenty years. From 6 April 2017, this highest remittance basis charge no longer applies, as the remittance basis is not available to individuals who have been UK resident for at least 15 of the previous 20 tax years. This is because HMRC treat such individuals as being domiciled in the UK (deemed domiciled) and as such the remittance basis would not be available.

The remittance basis charge (of £30,000 or £60,000) must be paid in addition to any UK tax due on remittances to the UK, as well as any UK tax due on UK income and gains.

Only those with very large foreign incomes or gains that they do not wish to pay UK tax on will find it worthwhile claiming the remittance basis in any given year where the remittance basis charge applies.

Temporary Repatriation Facility

If you have been taxed on the remittance basis for a tax year prior to 2025/26, then you may have foreign income and gains which would be taxable in the UK if remitted to the UK (even if they are remitted on or after 6 April 2025). If so, it is possible to ‘designate’ such income under the Temporary Repatriation Facility (TRF), which means:

1. You choose to pay, for the tax year in which the income is designated, a special low rate of tax, and
2. If that income is remitted to the UK in the tax year of designation or a future tax year, no further UK tax liability arises.

The TRF is only available for three tax years from 2025/26. You must be UK resident for the year in which you make the election. The rate of tax paid on designated income depends on the tax year in which the income is designated:

The TRF is designed to encourage individuals to remit foreign income and gains to the UK.

Designated amounts under the TRF must be net of foreign tax paid (or payable). It is therefore not possible to claim a foreign tax credit against the TRF tax rate. In determining whether a TRF election is beneficial, you may wish to consider whether you would owe a lower amount of tax if the income was instead remitted and a foreign tax credit claimed on the remitted amount.

You may designate any amount of foreign income or gains under the TRF. The election is made in the self assessment tax return for the year in which the income is being designated.

The deadline for the election the 31 January in the second tax year following the tax year of the election. For example, TRF elections for the tax year 2025/26 would need to be made by 31 January 2028.

If you are considering making an election under the TRF, you may wish to seek advice.

For more information on the TRF, see GOV.UK. 

Capital gains tax rebasing for remittance basis claimants

If certain conditions are met, disposals of assets on or after 6 April 2025 are ‘rebased’ to their market value on 5 April 2017. This means that you are assumed to have acquired the asset on 5 April 2017 for an amount equal to its market value on that date.

This applies even if the asset has been acquired from your spouse or civil partner under the ‘no gain no loss’ rules.

The conditions are:

• You owned the asset on 5 April 2017
• You made the disposal on or after 6 April 2025
• The asset was not in the UK between 6 March 2024 and 5 April 2025 (this condition subject to some exceptions)
• You were not domiciled, or deemed domiciled, in the UK at any time before 2025/26
• You claimed the remittance basis for at least one tax year in the period from 2017/28 to 2024/25 (not including where the remittance basis applied automatically without a claim)

If you prefer, you can elect to disapply the above rule for a particular disposal. For example, you may choose to do this if the market value at 5 April 2017 was lower than the previous base cost. In that case, disapplying the rule would result in a smaller gain. For more information, see GOV.UK.