RDRM32240 - Remittance basis: accessing the remittance basis: long term UK residents: interaction with extra statutory concession (ESC) A11
Individuals who are resident in the UK in any tax year are regarded for tax purposes as resident for the whole of that tax year. This includes years in which the individual comes to or leaves the UK part way through the tax year.
Prior to tax year 2013-2014 individuals could claim, under extra-statutory concession A11, to have their years of arrival or departure treated as a split year whereby they were taxed as a UK resident only for the part of the year following their arrival or preceding their departure.
Even if this ‘split-year’ treatment is given, these years count as a full year of residence in determining whether an individual meets the long-term residents rule RDRM32220, that is, whether the individual has been in the UK for a minimum of at least seven out of the nine tax years immediately preceding the current tax year.
Long-term residents who claim the remittance basis under ITA07/s809B are subject to the remittance basis charge. This charge is payable in full if the remittance basis is claimed, even in years in which the individual arrives in or departs from the UK part the way through the year, and even if ESCA11 is applied.
From 2013-2014 residence is defined in law. Split year treatment will apply if the conditions of at least one of the cases of split year are met. For more details see RDRM12000 onwards. For the purposes of calculating liability to the RBC the position has not changed. A year in which split year treatment is claimed is still counted as a year of residence and a long term resident who wished to claim the remittance basis in a split year will be liable to the rremittance basis charge.
Example 1
Jo arrives in the UK on 9 January 2004 so uses ESC A11 to claim split year treatment, Jo is taxed in 2003-2004 as a non-resident for the period from 6 April 2003 to 9 January 2004, and as a resident from 10 January to 5 April 2004.
Jo is therefore resident for tax purposes in the following years:
| Count | Year | Residence status |
|---|---|---|
| 1 | 2003-2004 | Resident |
| 2 | 2004-2005 | Resident |
| 3 | 2005-2006 | Resident |
| 4 | 2006-2007 | Resident |
| 5 | 2007-2008 | Resident |
| 6 | 2008-2009 | Resident |
| 7 | 2009-2010 | Resident |
| 8 | 2010-2011 | Resident |
Note: 2003-2004 is counted as a full year of residence, even though Jo only arrived in January 2004 and claimed split year treatment.
Jo remains resident in the UK but not domiciled and in 2010-2011 has £200,000 of un-remitted foreign income and gains as well as income from a UK employment. If Jo claims the remittance basis in 2010-2011 Jo will be liable for the remittance basis charge of £30,000.
Example 2
Petra is a non-domiciled individual who has been resident in the UK since 1995-1996 , so by 2008-2009 she is regarded as a ‘long-term’ resident. In 2014-2015, in addition to her UK employment income she has £250,000 foreign income from her offshore investments between April and October 2014, which she does not remit.
On 15 November 2014 Petra leaves the UK to take up a new employment in New Zealand. Split year treatment under case 1 applies and Petra is taxed as non-resident for the period from 15 November 2014 to 5 April 2015. Petra also claims the remittance basis (ITA07/s809B) in respect of her £250,000 foreign investment income.
As a long-term resident of the UK, and because Petra has been resident in the UK for 12 out of the last 14 years Petra will have to pay the higher £50,000 remittance basis charge in full. The charge is not apportioned between her periods of UK and non-UK residence under the statutory residence test.