Increased remittance basis charge
2.Part 1 of the Schedule introduces an increased remittance basis charge of £50,000 payable by individuals who claim the remittance basis of taxation and who have been resident in the UK in at least 12 of the 14 tax years preceding the tax year in which they make that claim.
3.Paragraph 2 of the Schedule amends section 809C of the Income Tax Act 2007 (ITA) and introduces the 12-year residence test and the 7-year residence test. An individual will meet the 12-year test in any tax year in which they have been resident in the UK in at least 12 of the 14 tax years preceding that year and will meet the 7-year test in any tax year in which they have been resident in the UK in at least seven of the nine tax years preceding that year. It also amends section 809C(4) to provide for two alternative figures for the maximum relevant tax increase of £50,000 (where the 12-year test is met) and £30,000 (where only the 7-year test is met).
4.Paragraph 3 of the Schedule amends section 809H ITA and provides that an individual claiming the remittance basis will be liable to pay the £50,000 remittance basis charge for any tax year in which they meet the 12-year test, and liable to pay the £30,000 annual charge for any tax year in which they only meet the 7-year test. It also substitutes the term ‘the applicable amount’ for ‘£30,000’ each time it occurs in that section.
5.Paragraph 4 of the Schedule substitutes a new section 809V in ITA. It provides that, in cases where an individual uses their foreign income and gains to pay the £50,000 or the £30,000 annual charge, those income and gains will not be treated as having been remitted to the UK. It also provides that this rule will not apply to the extent that the payments are repaid by HM Revenue & Customs (HMRC).
6.Paragraph 5 of the Schedule provides for the amendments made by paragraphs 1 to 4 to have effect from the start of the 2012-13 tax year.
