I would really appreciate help with clarifying something, I am going round and round in circles in my head with all the rules and getting nowhere.
Situation: Uk resident with foreign income, taxed always on arising basis up to year 2013-2014. Has foreign income in 14-15 of 3k and will be taxed on arising basis too.
Needs to remit money before April 5th from an account that contains 2014-15 foreign income. (This will of course not have been taxed yet).
Question: if he remits money from this account (a mixed fund? that contains already taxed "on arising income" up to April 14 and untaxed arising up to April 15), does he need to pay tax on it on remittance? I mean, paying tax on it twice, once on remittance in March 2015 and once when declaring it as global income on the SA form for 14-15?
If so, is the solution to split the money into two accounts before April 5th, or is it too late due to the Last in First Out principle?
Thanks so much for any enlightenment on this!
Replies (5)
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If the taxpayer is taxed on the arising basis, then there's no need to claim the remittance basis.
Remittance basis is available if you include a claim for it on your tax return.
See the HMRC helpsheet https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/323623/hs264.pdf
The remittance of 14/15 income will presumably be taxed on the arising basis in 14/15, and so there's no need to apply the remittance basis to this.
Well yes, you'll pay tax on your overseas income, but in the absence of a claim for the remittance basis, it will be on the arising basis. I'd recommend talking it through with your adviser, and clarifying this, as they will be more familiar with your affairs than anyone on here.
Is the individual non-domiciled?
The domicile status is not mentioned. If UK-dom then the remittance basis is not an option and shouldn't be considered.