Who should claim the remittance basis? - Part 2

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Who should claim the remittance basis? - Part 2

UK Resident Less Than 8 Years

If you've been resident for less than 8 years (including the current year) you are not subject to the £30,000 charge and it often pays to claim the remittance basis if your income is more than £11,339.

However, there are a couple of important things to watch out for.

Firstly, you also lose your capital gains tax annual exemption if you claim the remittance basis. This may result in extra tax on any UK assets you have sold.
The second thing you have to watch out for is bringing the money into the UK at a later date.

UK Resident for between 8 and 12 Years

If you've been living in the UK for between 8 and 12 years (including the current year) you will have to pay the £30,000 charge if you claim the remittance basis.

It's only worth paying this charge if it's less than your normal UK income tax.

If you have overseas income of £75,000, your normal UK income tax on that money would be £30,000 if you are a higher-rate taxpayer:
£75,000 x 40% tax = £30,000

So your overseas income has to be higher than this to make paying the charge worthwhile.

Also, don't forget that you will lose your income tax personal allowance which shelters the first £9,440 of your income from tax, so your income must exceed £84,440 or you will not save any money by claiming the remittance basis:

UK Resident for More than 12 Years

If you've been living in the UK for more than 12 years (including the current year) you will have to pay the £50,000 charge if you claim the remittance basis.

Once you have to pay the £50,000 charge your break-even point will obviously change significantly.

If all your income was taxed at 45% you'd need to have £111,111 of unremitted income before it would be worthwhile.

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