If you’re living in the UK but have substantial income or assets abroad, the remittance basis can be a powerful tool for managing your tax exposure. Yet, with the rules changing from April 2025, it’s vital to understand how to claim, report, and plan for the future—especially if you’re dealing with large sums or complex family arrangements.

Let’s walk through the essentials, using practical examples and clear solutions, so you can make informed decisions and avoid costly mistakes.

Eligibility for the Remittance Basis: Who Can Claim and When

The remittance basis allows UK residents who are not domiciled in the UK to pay tax only on foreign income and gains that they bring into the UK. If you’re a non-dom, you can claim the remittance basis each year, but after seven years of UK residence, you’ll need to pay the Remittance Basis Charge (RBC)—£30,000 or £60,000 depending on your years in the UK.

You lose your personal allowance and capital gains exemption when you claim, but for those with significant offshore income, the benefits can outweigh the costs. If you’re new to the UK, you can claim the remittance basis without paying the RBC for your first seven years.

How to Report and Segregate Foreign Income and Gains

Reporting is done through your Self Assessment tax return. You’ll need to declare your worldwide income, specify that you’re claiming the remittance basis, and detail any amounts brought into the UK. Segregating your funds is crucial—keep separate accounts for clean capital, foreign income, and gains. This helps you avoid accidental remittance and makes it easier to prove the source of any funds you bring into the UK.

For example, if you have a Swiss account with both clean capital and untaxed income, use separate sub-accounts or keep detailed records of deposits and withdrawals. If you remit funds, document the source and keep correspondence with your bank.

Example: Selling a £50 Million Overseas Business and Remitting Funds

Imagine you sell your overseas business for £50 million and want to use some of the proceeds in the UK. If you’re claiming the remittance basis, only the amount you bring into the UK is taxable. To minimise your tax bill, keep the sale proceeds in a separate account and remit only what you need.

Let’s say you want to buy a London property for £5 million. Transfer that amount from your offshore account directly to the UK for the purchase, and keep records showing the source. The remaining £45 million stays offshore, outside the UK tax net unless you bring it in later.

If you mix the funds with UK income or transfer them to a UK account before using them, you could trigger a tax charge on the full amount. Careful planning and clear documentation are essential.

Business Investment Relief: Investing in UK Startups Tax-Efficiently

Business Investment Relief (BIR) allows non-doms to invest foreign income or gains in UK businesses without triggering a remittance. If you want to support a UK startup or expand your business interests, BIR can be a valuable tool.

To qualify, invest in a UK trading company and follow the BIR rules—register the investment, keep records, and ensure the funds are used for qualifying business purposes. If you later sell the investment or the company ceases trading, you may need to take steps to avoid a remittance charge.

For example, if you use £2 million of offshore income to invest in a UK tech startup, register the investment with HMRC and keep all documentation. If the company is sold, ensure the proceeds are returned offshore or reinvested in another qualifying business.

Family Planning: How Remittance Rules Affect Spouses and Children

Family arrangements can complicate remittance planning. Transfers between spouses are usually exempt from UK tax, but only if both are UK domiciled or deemed domiciled. If your spouse is non-UK domiciled, the exemption is capped unless they elect to be treated as UK domiciled.

Children’s domicile status also matters. If you remit funds for their education or living expenses, document the source and purpose. If your children live abroad and are non-UK domiciled, consider making gifts offshore to avoid UK tax.

For example, if you pay your child’s university fees in the UK using offshore income, remit the funds directly to the university and keep records. If you transfer money to your child’s UK account, it could be treated as a remittance and taxed.

Preparing for the New FIG Regime and Transitional Actions

From April 2025, the remittance basis is being replaced by the 4-year Foreign Income and Gains (FIG) regime for new arrivals. If you’re currently claiming the remittance basis, review your position now. Consider whether you need to pay the RBC for the final year, and make sure any payments are made correctly.

If you have significant unremitted income or gains offshore, look at the new Temporary Repatriation Facility (TRF). This allows you to bring funds into the UK at a reduced tax rate for a limited period. The rules are complex, but it’s worth considering if you want to repatriate funds before the new regime takes effect.

Real Example: Navigating the Changes

Elena, a UK resident with a £10 million offshore investment portfolio, claimed the remittance basis for several years. She sold her overseas business for £50 million and wanted to use £5 million to buy a UK home. She kept the sale proceeds in a separate account, remitted only the amount needed, and documented the transaction. She also used BIR to invest £2 million in a UK startup, registering the investment and keeping all records.

With the new rules, Elena reviewed her position, considered the TRF, and planned her remittances carefully to avoid unexpected tax bills.

Final Checklist

• Review your eligibility for the remittance basis and RBC.

• Segregate clean capital, foreign income, and gains.

• Document all remittances and keep records for HMRC.

• Use BIR for UK investments and follow the rules.

• Plan family transfers and document the source and purpose.

• Prepare for the new FIG regime and consider the TRF.

Feeling Overwhelmed? You’re Not Alone

Claiming the remittance basis can be complex, but with careful planning and clear records, you can manage your tax exposure and protect your wealth. The rules are changing, but you have options. Take action now, keep asking questions, and make sure your finances reflect your global lifestyle.

Disclaimer: This article provides general information for educational purposes only. It is not legal, financial, or tax advice. Outcomes can vary based on your personal circumstances.