remittance basis

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An individual resident, but not domiciled, in the UK is subject to UK income tax and capital gains tax on a remittance basis during the first six years in which he is so resident (see non-domiciled). For later years, the remittance basis is applied if the individual so elects and he or she pays a fee of £30,000 for the tax year (Finance Act 2008). When the remittance basis applies, income arising from a foreign source is only subject to UK income tax if it is remitted to the UK and gains arising on the disposal of a foreign asset are only subject to UK capital gains tax insofar as they are remitted. In general, a remittance for this purpose is a transfer of money; the import of goods purchased abroad is not a remittance until the goods are sold. In Slatteryv Moore Stephens (2003), the High Court awarded damages against an accountancy firm for failing to advise a client of the tax saving available to him from the application of the remittance basis.

Subjects: Law — Accounting.

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