SAIM1140 - Savings and investment income: foreign income: remittance basis

Remittance basis

Under Chapter 2 of Part 8 ITTOIA05 a person who is either non-domiciled in the UK, or not ordinarily resident may claim that the ‘remittance basis’ should apply to his ‘relevant foreign income’ ( SAIM1130). The claim is under ITTOIA05/S831. No deductions are allowed from remittance basis income, except for trade income. Remittance basis does not apply to income arising in the Republic of Ireland.

Relief for delayed remittances

Where a taxpayer is chargeable on foreign income for any tax year on the remittance basis a claim can be made under ITTOIA/S835. This applies where the whole or part of the income arose in a year earlier than the relevant tax year and by reason of currency restrictions a person was unable to remit the income to the UK before the tax year. Where the claim is valid, the delayed income is deducted from the remittance basis income received in the relevant tax year, and carried back to the tax year in which it arose.

The claimant must show that he was unable to transfer the overseas income to the UK before the tax year because of the laws of the territory where the income arose or executive action of its Government, or because of the impossibility of obtaining foreign currency there.

Claims under ITTOIA05/S835 must be made on or before the fifth anniversary of the normal self-assessment filing date for the tax year for which relief is claimed.

ITTOIA05/S836 extends relief under section 835 to a person who is granted, with retrospective effect, a pension or an increase of pension assessable on the remittance basis. The amount paid in respect of a previous tax year under the grant is treated as arising in that previous year, and the pensioner as having possessed the source of the pension at that time.