Introduction Background Note
239.The remittance basis is an alternative basis of taxation which applies to foreign income and capital gains. It is available to UK resident individuals who are not domiciled and/or not ordinarily resident in the UK. Such individuals have the option of electing to be taxed on the remittance basis and those who do so are liable to UK tax on all their income and capital gains which arise in the UK, but only liable to UK tax on their foreign income and capital gains to the extent that they are remitted to the UK.
240.The remittance basis rules were revised in Finance Act 2008. The main revisions were the introduction of an annual Remittance Basis Charge of £30,000 for individuals who had been resident in the UK for at least seven out of the preceding nine years and who wished to claim the remittance basis and a series of provisions to address a number of loopholes and anomalies in the previous remittance basis regime.
241.Further minor changes to the remittance basis were introduced in the Finance Acts 2009, 2010 and 2011.
242.At Budget 2011, the Government announced a package of measures to reform the remittance basis with the objective of ensuring that non-domiciled individuals pay a fair tax contribution and of encouraging them to bring their foreign income and gains to the UK to invest in businesses. It also announced a number of technical simplifications to some aspects of the current rules to reduce undue administrative burdens.
243.On 17 June 2011, the Government published a consultation document, ‘Reform of the taxation of non-domiciled individuals: a consultation’ which sought views on the detailed design of the changes announced in the Budget. Consultation ended on 9 September 2011.
244.The main features of the proposed reforms were:
	the introduction of a higher annual charge of £50,000 payable by individuals who claim the remittance basis and who have been resident in the UK in at least 12 of the 14 tax years prior to the year of claim;
	a new relief to encourage investment by allowing remittance basis taxpayers to remit their foreign income and gains to the UK tax-free where they are used for the purpose of making a commercial investment in a company; and
	a number of technical changes to simplify some aspects of the current remittance basis rules.
245.The Government published its response to the representations made during the consultation on 6 December 2011.
246.Following further consultation, a number of changes were made to the draft legislation, including a new exemption for CGT on sales of exempt property and a new provision to allow individuals taking advantage of the investment relief to retain an amount of the proceeds from the disposal of an investment in the UK to meet any CGT liability. A series of further minor changes were made to the legislation in response to representations made during consultation. The consultation period ended on 10 February 2012.