New remittance basis planning

The rules for the taxation of those entitled to use the remittance basis changed radically from 6 April 2008.  There is still much confusion concerning the way the new rules work.  Some individuals who have previously used the remittance basis now find that being taxed in the UK on a worldwide basis is more beneficial. 

Is the remittance basis still right for you? 

Speaking to us before you send us your Tax Return information will ensure that you understand what information you need to collate to allow an informed decision to be made. 

Will you have to pay the £30,000 remittance basis charge? 

Consider whether your offshore income and gains can be structured so that there is no UK tax liability on them.  Alternatively, consider whether matters can be structured so that the remittance basis charge does not have to be suffered by both spouses.

Consider what to do with mixed funds 

There are special rules for taxing remittances from mixed funds.  We can help you to segregate mixed funds and get the most tax beneficial result from the matching rules.

Open a "nominated income" account

The remittance basis charge must be linked to actual foreign income or gains.  If you remit any of the nominated income or gains, special matching rules apply that may disadvantage you.  A small offshore account can be opened to act as your "nominated income" account that you need never touch.  Interest should be received on the account before 5 April to be effective for 2009/10.

Consider whether to elect for foreign capital losses to be allowable losses

The first year you choose to use the remittance basis from 2008 you can elect for your foreign capital losses to be allowable losses.  However there are downsides to making an election and it needs to be carefully considered.  You and you spouse can elect independently.

Rebasing election for offshore trusts

Offshore trustees with beneficiaries who are UK resident but non-UK domiciled may elect for assets held in the trust and underlying companies to be re-based as at 6 April 2008 for capital gains tax.  The election must be made by 31 January following the end of the tax year that the first capital payment is made to a relevant beneficiary. 

Offshore trustees should consider whether to appoint assets to beneficiaries if they have reduced in value since 6 April 2008.

Please contact your usual Littlejohn tax adviser for advice on how the changes to the remittance basis will affect you or email tax@littlejohnllp.com