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Remittance basis

Practical issues when claiming

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I have ended up with quite a lot of US citizen clients, so non dom.  While I am happy with the rules and my clients have US tax advisers, I should be grateful for any thoughts on the following practical issues as I have not had to claim the remittance basis for a client before.

- is the only way to claim by registering for self-assessment (or is this just HMRC’s list which says so)?

- do you always have to put the amount of income and gains for which you are claiming the remittance basis on the SA return?

- if you had say $50 of unremitted dividends then it is best to not claim the remittance basis since you lose the personal allowance. So your software should remove the PA - Taxfiler has left both so a bit confusing that it let me do that.

Thanks

M

Replies (49)

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By carnmores
11th Dec 2019 15:18

do you mean $50k? dont understand why $50
if you dont have any UK arising income how do you access funds to spend?
no need to list unremitted income imo unless possibly it comes from a related UK source?
i also use taxfiler and do not have any problems.
you didnt take up my offer
Nick

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Replying to carnmores:
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By Matrix
11th Dec 2019 15:25

Oh yes! Do u think Tax Cafe has anything on this?

No this client has $50 US dividend income. If I claim remittance basis then Taxfiler leaves the PA but her other income exceeds the PA so better off not claiming it, will amend but was wondering if anyone had also experienced this issue with this software. Have you claimed remittance basis on Taxfiler?

It asks for the amount for the claim so I assume you have to list it?

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Replying to Matrix:
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By carnmores
11th Dec 2019 15:50

I will check Tax filer after my walk yes have a couple of millionaire earners on it piece of cake. Have you checked and reviewed its a good way of checking sorry if that is a silly question

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By Red Leader
11th Dec 2019 16:29

<£2,000.

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Replying to Red Leader:
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By Matrix
11th Dec 2019 16:47

Thanks so are you suggesting that I don’t need to do anything if the unremitted income is less than £2k? So it does not appear on a UK tax return at all?

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Replying to Matrix:
By Red Leader
11th Dec 2019 17:42

Have you reviewed boxes 23, 28 and 29 of the non-res pages of the SATR?

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By Matrix
11th Dec 2019 20:23

Yes I have completed them except the date she came to the UK as not this tax year, but do I need to put the unremitted income in box 34 and does she still get the personal allowance since her unremitted income is less than £2k? Thanks

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Replying to Red Leader:
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By carnmores
11th Dec 2019 18:18

it simply doesnt go in the tax return if its not remitted

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By Matrix
11th Dec 2019 20:22

I don’t know what you mean, do you only complete the section if you are paying the charge? What about boxes 28, 29 and 34?

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By David Treitel
11th Dec 2019 17:53

You mention having a lot of US citizen clients. Great news, so do I.

It is rare, very rare, that electing to claim the remittance basis saves tax globally for US citizens because the US gives credit for a great deal of UK tax under Article 24 of the US/UK tax treaty.

Hopefully you are discussing issues relating to offshore income gains, US living trusts, IRAs and 401(k)s with all the clients. It is generally better for the client to have their US returns also prepared here in the UK where we are familiar with the UKs quaint 5th April tax year-end, ISAs, PFICs, UK pension plans, tax payment dates etc. Let me know if we can help at all.

With kind regards

David Treitel | Managing Director | American Tax Returns Ltd
The Old Exchange, 12 Compton Road, London, SW19 7QD

Tel: 020 3542 6330
Email: [email protected]

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By Matrix
11th Dec 2019 20:44

David

I have called your office in the past looking for advice on setting up a US corp and Canadian tax advice but you weren’t able to help since I was told you only deal with personal tax. Do you deal with CTB elections as most of my clients have UK companies and are looking for a cost effective solution to making a US tax election?

Thanks

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By Wanderer
11th Dec 2019 18:06

Not sure if I'm understanding your scenario correctly but isn't the main practical issue with the remittance basis the £30,000 / £60,000 charge?

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Replying to Wanderer:
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By Matrix
11th Dec 2019 20:35

No I am trying to work out how it goes on a UK tax return when the charge doesn’t apply.

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By carnmores
11th Dec 2019 18:16

matrix , youve confused me now

if the income is not remitted its not nominated exclude all non remitted income, this is only relevant when paying the non dom charge

https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittan...

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By Matrix
11th Dec 2019 20:31

No this has nothing to do with the charge, it is only to do with completing a UK tax return. My clients have only been in the UK 1-2 years.

Please would someone advise if you have to complete a tax return to claim the remittance basis if the income/gains are less than or more than £2k. Also, if the client is completing a tax return already then can I ignore unremitted gains less than £2k? Or are you saying that it doesn’t need to go on a tax return whereas I thought the remittance basis had to be claimed?

David, thanks, one of my clients has suffered zero US tax on gains so it will be interesting to see where we come out on the UK position, I am looking into the remittance basis in any case.

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Replying to Matrix:
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By carnmores
11th Dec 2019 20:38

Youve missed the point completely if you are a non dom claiming the remitance basis you DO NOT include any unremitted foreign income, is that clear. You only use the nominated income boxes if you are paying the non dom charge. This is not complicated but this thread has been complicated by incorrect replies

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Replying to carnmores:
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By Matrix
11th Dec 2019 20:41

Thanks Nick what about boxes 28 and 29. I read that if you don’t claim the remittance basis then you are taxed on an arising basis?

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Replying to Matrix:
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By carnmores
11th Dec 2019 22:26

https://assets.publishing.service.gov.uk/government/uploads/system/uploa...

scroll down for advice on 28 & 29. let me know if i can help further.

Nick

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By carnmores
12th Dec 2019 13:12

Matrix have you cracked it

https://help.taxfiler.co.uk/?#remittance_basis

nick

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Replying to carnmores:
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By Matrix
12th Dec 2019 13:21

Thanks Nick. Never seen this before and have submitted hundreds of tax returns through Taxfiler so well done.

Why do you not complete these pages for clients claiming the remittance basis?

Do you think Taxfiler is right and my client can still claim the PA as her unremitted income is <£2k? Thanks

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Replying to Matrix:
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By carnmores
12th Dec 2019 13:58

i submit the residence and remittance basis pages always

if you scroll down the help page this appears

Dual resident claiming personal allowances under DTA?
Normally a tax payer claiming the remittance basis does not qualify to receive certain UK allowances, such as the Personal Allowance, Blind Persons' Allowance or CGT Annual Exempt Amount. In some specific circumstances a tax payer who is claiming the remittance basis may be entitled to these allowances by virtue of being dual resident under certain Double Taxation Agreements. If this is the case, tick this box, then use the Residence status section to enter details of the country or countries in which the tax payer is also resident.

my clients are very high earners so the PA is not as problem and therefore the <£2000 pretty much irrelevant , i think

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Replying to carnmores:
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By Matrix
12th Dec 2019 14:53

I am now confused. You said that you didn’t need to complete a UK tax return to claim the remittance basis and now you say you submit the return for all clients?

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Replying to Matrix:
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By carnmores
12th Dec 2019 15:09

i certainly did not intend to say that at all, where did i say that i think we've got our wires crossed. Of course you need to submit a return if you have UK arising income

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Replying to carnmores:
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By Matrix
12th Dec 2019 15:13

18.18 yesterday.

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Replying to Matrix:
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By carnmores
12th Dec 2019 15:42

are you referring to this comment

it simply doesnt go in the tax return if its not remitted

if so then you have misunderstood me and i apologise for any confusion
unremitted income does not go on the tax return (save for the £2000 exemption)

am not sure why you are struggling here the PA? i am happy to replicate on Taxfiler what was the tax payers UK income . you can PM me if you prefer

nick

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Replying to carnmores:
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By Matrix
12th Dec 2019 15:14

Duplicated

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Replying to carnmores:
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By Matrix
12th Dec 2019 15:24

Nick

Pleas would you talk me through the process of your clients who claim the remittance basis, do you claim on a tax return or not? Is my client entitled to the personal allowance or not?

Thanks

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By Tax Dragon
12th Dec 2019 13:31

This thread confuses me.

So here's some legislation: Ss809D and 809F(1) ITA 2007.

Is that relevant/does it help?

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Replying to Tax Dragon:
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By Matrix
12th Dec 2019 14:55

Yes it is very confusing, do you know if the taxpayer is entitled to the personal allowance if <£2k unremitted income?

I am glad that I have worked in tax for 25 years and make my own decisions since AWeb has not really helped me here.

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Replying to Matrix:
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By Tax Dragon
12th Dec 2019 14:58

The point is that s809D does not require a claim. It's automatic. You lose your PAs etc if you have to make a claim. That's s809G.

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Replying to Tax Dragon:
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By Matrix
12th Dec 2019 15:21

Thanks would you care to answer the questions in my original post without posting section numbers? I help people on here where I can and this is one of the few times when I have asked for practical help. Thanks.

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Replying to Matrix:
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By Tax Dragon
12th Dec 2019 15:39

You want my opinion of what the sections say, rather than looking yourself? That undermines my whole understanding of what Aweb is about.

However, here goes:

S809G says you lose your personal allowance if you claim the remittance basis.
S809D says the remittance basis applies (NO CLAIM NEEDED) if your unremitted gains and income is <£2k.
Restating:
i) unremitted gains and income <£2k => remittance basis can apply without a claim;
ii) PAs are lost only if remittance basis claimed
Ergo unremitted gains and income <£2k ≠> loss of PA

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Replying to Tax Dragon:
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By Matrix
12th Dec 2019 15:44

Thanks so much, so if you are submitting a tax return and the unremitted income is less than £2k then do you need to complete the remittance pages or not? As I said, my questions are purely practical.

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Replying to Matrix:
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By Tax Dragon
12th Dec 2019 16:36

Don't you need to tick box 29?

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Replying to Tax Dragon:
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By carnmores
12th Dec 2019 16:15

this section is so badly written
Tax Dragon i don't agree with your ergo,you state

unremitted gains and income <£2000 remittance basis can apply without a claim so you tick the box saying gains under £2000 but do not tick the box to claim the remittance basis therefore preserving the PA. If the remittance basis is claimed you will lose your PA (agreed)

where i disagree is with your last line 'Ergo unremitted gains and income <£2k ≠> loss of PA' that does not make sense if i understand your mathematical function correctly. surely the point is that if your unremitted income is less that £2k you preserve your PA so you need to take out the second >. then that would make sense

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Replying to carnmores:
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By Tax Dragon
12th Dec 2019 16:38

≠> was supposed to mean "does not imply".

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Replying to Tax Dragon:
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By carnmores
12th Dec 2019 17:35

Thanks i hope Matrix is there now

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Replying to Tax Dragon:
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By carnmores
12th Dec 2019 17:35

Thanks i hope Matrix is there now

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By Matrix
12th Dec 2019 17:42

Thanks so I leave Taxfiler as it is - with $50 US dividends and retention of personal allowance.

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Replying to Matrix:
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By carnmores
12th Dec 2019 18:47

Yes. No point claiming remittance basis if you can use the deminimis exemption

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By carnmores
13th Dec 2019 11:29
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By SteLacca
13th Dec 2019 15:07

Wish I'd seen this earlier. Tested in Digita. Non dom remittance basis with <£2k unremitted resulted in box 23 being checked only. Nothing else.

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Replying to SteLacca:
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By Tax Dragon
13th Dec 2019 15:11

Not even 29?

That doesn't sound right.

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Replying to Tax Dragon:
By SteLacca
13th Dec 2019 16:08

It struck me as not looking right, too. So I tested various scenarios with unremitted income >£2K, all income remitted etc. and it was the only scenario that didn't bother with anything else if RB claimed and unremitted income <£2K.

Of course, Digita could be wrong.....

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By Tax Dragon
13th Dec 2019 16:14

What about RB not claimed and unremitted income <£2k?

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By carnmores
13th Dec 2019 17:55

only a tick in box 29 required

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By Tax Dragon
14th Dec 2019 08:51

carnmores wrote:

only a tick in box 29 required

Yes, but it wasn't clear whether SteLa had tested the scenario. In fact, it seemed he might not have done. Hence my comment.

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By carnmores
14th Dec 2019 09:41

noted but not much to test in that scenario. hopefully we are all there now.
one final point it hardly matters if your unremitted gains are < £2000 if your income is greater than £120k as you lose your PA anyway

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Replying to SteLacca:
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By carnmores
13th Dec 2019 17:56

its a false scenario to put in a figure greater than £2k its bound to confuse any software.

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