HMRC have launched a new campaign addressed to individuals believed to have underpaid the Remittance Basis Charge before they transition to the new Foreign Income and Gains (FIG) Regime from 6 April 2025.
Who pays the Remittance Basis Charge (RBC)?
The remittance basis allows non-domiciled UK residents to pay tax only on their UK income and gains and any foreign income or gains they bring into the UK instead of on their worldwide income as it arises.
However, there are significant trade-offs to claiming the remittance basis. If you claim the remittance basis, you will lose your entitlement to your personal allowance and your annual capital gains exempt amount. Further, non-domiciled individuals who have been resident for 7 of the previous 9 tax years may be required to pay an RBC of £30,000.
If you have been resident but non-domiciled for 12 of the previous 14 tax years the RBC increases to £60,000.
What are the consequences of not paying?
If you have received a letter from HMRC and you met the criteria for the RBC in the 2022/23 tax year, you will have 60 days to amend your return to either:
- pay the RBC
- pay tax on the arising basis and include your worldwide income and gains.
If you’re happy that you did not meet the criteria to pay the RBC, then you do not need to do anything. However, if HMRC subsequently find your claim to be incorrect, you may have to pay additional tax and the remittance basis charge, as well as interest on any tax that is paid late. Additional penalties may also be due on a case-by-case basis.
If you have received one of these letters and are unsure whether you need to amend your return, please get in touch with us as we will be happy to assist.
Future Changes
From 6 April 2025, the remittance basis will be replaced by a new Foreign Income and Gains (FIG) regime. The remittance basis of taxation will no longer be available, and this will impact your overall tax position in the UK.
If you would like advice on how you may be impacted, please get in touch with us.
This article was correct at time of publication.
