Residence and domicile - alienation

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Q. If a remittance basis user gives untaxed foreign income or chargeable gains to another individual before 6 April 2008 and that individual before 6 April 2008 brings that income or gains into the UK, will there be a tax charge on the donor in 2008-09 if the income or gains remain in the UK on 6 April 2008?

No – the new rules on gifts of this sort don’t apply in respect of income or chargeable gains if the gift and subsequent remittance to the UK occurs before 6 April 2008. So long as the gift is genuine and not part of some wider arrangement there will not be a tax charge on the donor in these circumstances.

Q. A remittance basis user gives untaxed foreign income or chargeable gains to another individual (Mr A) before 6 April 2008 and that individual brings that income or gains into the UK before 6 April 2008. Mr A then takes that income or gains out of the UK and re-imports it after 5 April 2008. Will there be a tax charge on the donor on the re-importation on the grounds the income / gains is remitted to the UK in that later year?

No – the new rules on gifts of this sort don’t apply in respect of income or chargeable gains if the gift and subsequent remittance to the UK occurs prior to 6 April 2008. So long as the gift is genuine and not part of some wider arrangement, there will not be a tax charge on the donor in these circumstances. The re-importation after 5 April 2008 does not give rise to a tax charge just because the original importation occurred under the old rules and did not give rise to a tax charge at that time.

Q. If a remittance basis user gives untaxed foreign income or chargeable gains that arose in 2007-08 or an earlier year to another individual after 5 April 2008 and that individual brings that income or gains into the UK in 2008-09, will there be a tax charge on the donor in 2008-09?

Yes, but only if the donor benefits in any way from the income or gains. For example, if the income or gains purchased a house the donor then lived in.

Q If a remittance basis user gives untaxed foreign income or chargeable gains that arose in 2008-09 or a later year to another individual (whether or not connected with them) who then brings that income or gains into the UK, will there be a tax charge on the donor in 2008-09 or the subsequent year on the grounds the income or gains are remitted to the UK in that year?

Yes, if the donor or his 'immediate family' benefit from the gift, the new rules apply in respect of income or chargeable gains if the gift and the remittance to the UK occurs after 5 April 2008.

Q. What is the immediate family?

Immediate family is defined as husbands and wives, civil partners, individuals living together as husband and wife or civil partners, and the children under 18 and grandchildren under 18 of any of those individuals. It also covers close companies, or foreign companies that would be close if in the UK, of which any of the individuals or children mentioned above are participators and trusts of which any of them are beneficiaries.