If you are resident in the UK and non UK domiciled you will be able to make a yearly election on how you would like your foreign income and gains to be taxed in the UK.
You can either be taxed on an arising basis or taxed on a remittance basis.
This is where you would be taxed in the UK on your UK and worldwide income and gains in the tax year it is generated. Tax relief will be available where overseas income and gains have suffered tax (depending on the double tax treaty in place).
This is where you elect to only pay tax in the UK on the UK income and gains and overseas income and gains that are brought into the UK. By claiming the remittance basis you will lose your entitlement to the personal allowance and also the annual allowance for capital gains tax purposes. The remittance basis charge will not apply where unremitted overseas income and gains are below £2,000 or is below 18. By claiming the remittance basis, and depending on the number of years you have been resident in the UK, you will be subject to a ‘Remittance basis charge’ for the privilege.
Below are details of the current position and proposed changes:
|No. of years in the UK||Current Remittance basis charge (£)||Proposed changes to Remittance basis charge (£)|
|7 out of last 9 years||30,000||30,000|
|12 out of last 14 years||50,000||60,000|
|17 out of last 20 years||0||90,000|
(Based on the Budget 18 March 2015, consultation is taking place.)