United Kingdom – Government Issues Consultation Document on Remittance Basis Charge

UK – Government Issues Consultation Document...

The U.K. government issued a consultation document looking at whether changes should be made to the way that non-U.K. domiciled individuals are taxed in the United Kingdom. The document’s proposals concerning the Remittance Basis Charge will potentially add to the cost of longer-term U.K. assignments for employers. They will also add to the complexity of U.K. legislation.

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Yesterday, the U.K. government issued a consultation document1 looking at whether changes should be made to the way that non-U.K. domiciled individuals are taxed in the United Kingdom.  The aim of the consultation document is to ensure that “individuals contribute their fair share in the U.K. in return for the benefit of living in this country.”  This consultation was announced in the Autumn Statement 2014 (see GMS Flash Alert 2014-114 (4 December 2014)).


Currently the election to be taxed on the remittance basis is made on an annual basis.  This means that individuals are able to structure their tax affairs so that the claim is not made (and therefore the Remittance Basis Charge (or RBC) is not paid) every year.  The government is considering introducing a fixed term for the election so that the RBC would be paid each year for a set amount of time, ensuring that the individuals who make the election are making a contribution to the U.K. economy, even if tax is not paid on worldwide income. 

Employers that have agreed to tax equalize this charge should be aware of these developments as this may involve some additional costs if the election ceases to be an annual event.  Even where the RBC is paid by the individuals themselves, employers that have longer-term assignees in the U.K. may wish to make them aware of the changes and potential impact on their U.K. tax liability.  


Individuals who are considered to be non-U.K. domiciled are able to pay taxes on the remittance basis of taxation.  This means that while U.K. sources of income are subject to U.K. tax, non-U.K. sources of income are taxed only to the extent that the income is remitted to the United Kingdom.  Examples of non-U.K. sources of income include non-U.K work-days (where relief can be claimed in the first three years of U.K. residence) or income and capital gains from overseas investments.   

While individuals whose unremitted foreign income is less than £2,000 qualify for the remittance basis of taxation automatically, anyone whose unremitted income is £2,000 or more must make a formal claim to be taxed on this basis.  Individuals who have been resident in the U.K for seven out of nine tax years must pay RBC of £30,000 to qualify for this basis of taxation.  For individuals who have been U.K. resident for 12 out of 14 years, the RBC rises to £50,000 (£60,000 from 2015/16).  A new charge of £90,000 for individuals who have been U.K. resident for 17 of the last 20 years was also announced in the Autumn Statement to take effect from the 2015/16 tax year. 

The alternative to claiming the remittance basis of taxation is to be taxed on the arising basis of taxation – meaning tax is paid on worldwide income.

Consultation Document in Detail

The minimum term proposed in the document for the payment of the charge is three years, although there is a suggestion that the fixed period could increase to four years for individuals who are resident for 12 out of 14 years, and five years for those who have been resident for 17 out of 20 years.

There are no changes proposed to the timing of the election and it is envisaged that this will continue to be made on a self-assessment tax return following the end of the tax year (i.e., by 31 January following the end of the U.K. tax year on 5 April). The individual will continue to have a four-year period in which to amend his tax return and change the basis on which he has filed the return if the individual’s understanding of his financial position is not as he had expected. 

It is, however, also anticipated that the new rules will be aligned to the existing rules for temporary non-U.K. residents, so that if an individual becomes nonresident and re-establishes U.K. residence within five years, the RBC will apply again from the time that residence is re-established.

There are two proposals for what happens at the end of a fixed-term election period as follows: 

  • A further election could be made for the next three years; or 
  • The claim for the remittance basis becomes a rolling claim made on an annual basis as long as the charge is paid.  If a claim is not made for one year, then the next claim made would have to be for a further three-year period.


Views are sought on all of the proposals contained within the document (which we outlined above).  Views are also sought on whether the introduction of a three-year fixed term is likely to change the behaviour of those making the claim to be taxed on the remittance basis and the way that the individual structures his tax affairs.  Other proposals will be considered providing they help achieve the objective of ensuring that non-U.K. domiciled individuals make a fair contribution to the Exchequer.  

Non-UK Domiciled Individuals Contribution Increase

The consultation document also reiterates a comment made in the Autumn Statement:  “While it is right that the tax system encourages skilled individuals to come to the UK from abroad, the government believes that the time is right to increase the contribution that non-UK domiciled individuals make. This is especially the case when they have been resident in the UK for many years, benefiting from the UK’s public services, infrastructure and stable political environment over a long period.”


The consultation was announced in the Autumn Statement, although the timing of the consultation was not known.  The proposals will potentially add to the cost of longer-term U.K. assignments for employers.  They will also add to the complexity of U.K. legislation.  KPMG LLP (U.K.) welcomes the opportunity to contribute to the consultation process.  

Next Steps

The consultation is open until 16 April 2015.  If you would like to contribute to the consultation, please speak to your usual KPMG GMS contact or to Marc, Steve, or Rachel with the KPMG International member firm in the United Kingdom (their contact details are shown below).

Alternatively, feedback can be provided direct to HM Revenue & Customs at the following address:

Remittance basis claim consultation

Personal Tax Team

HM Treasury

1 Horse Guards Road

London SW1A 2HQ

or to nondomiciletaxation@hmtreasury.gsi.gov.uk


For additional information or assistance, please contact your local GMS or People Services professional or one of the following professionals with KPMG LLP (U.K.):

Marc Burrows 

Tel. +44 20 7694 5930



Steve Wade 

Tel. +44 20 7311 2220 



Rachel Beecroft

Tel. +44 20 7311 3356


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The information contained in this newsletter was submitted by the KPMG International member firm in the United Kingdom.

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