RDRM35030 - Remittance basis: amounts remitted: quantification: Conditions A and B - remittances derived from foreign income or gains
Source: gov.uk (2025-04-07)


Example 1 (#IDAYI4JE)Example 2 (#IDAEJ4JE)Example 3 (#IDAQJ4JE)Example 4 (#IDAEK4JE)Example 5 (#IDAUK4JE)Example 6 (#IDAEL4JE)

If the money or other property, service or consideration for the service is not the original foreign income or gains but is derived from foreign income or gains of an individual, the amount remitted is equal to the original foreign income and gains from which the property etc derives (section 809P(3) ITA 2007).

The derivation of property etc. from foreign income and gains may not always be easily identifiable, as income or gains may pass through several items of property before an item is brought to, received or used in the UK, or used outside the UK to provide a benefit in the UK (from 6 April 2025), by or for the benefit of a relevant person.

The scope of derivation can be very wide. The rules apply to trace the original income and gains through any series of subsequent investments or transactions including transactions through relevant persons, gift recipients and where there is a connected operation, to the original event from which the untaxed income or gains arose. The rules ensure that untaxed foreign income or gains cannot be transferred into, for example, capital gains which would attract tax at a lower rate than income on remittance to the UK. The rules mean that the character of the original income and chargeable gains is not changed by being invested, spent or given away and there will be a remittance of the original income and gains if the conditions under section 809L ITA 2007 are met.

Where an individual gives untaxed foreign income or gains to another person then they should ensure the donee is aware that they must tell the donor if the property or anything subsequently derived from it is bought to the UK in circumstances such that there would be a remittance under section 809L.

The taxable amount is the amount of foreign income and gains from which the property, service or consideration derives, and not the value of the property upon remittance. Also, the property etc. does not have to be sold in the UK before there is a taxable remittance (refer to RDRM31250 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm31250) Changes to old regime - cash only).

Where, as in most cases, the property, service or consideration derives from a foreign currency, the taxable amount is the pounds sterling equivalent value (at time of remittance) of the amount of foreign currency (refer to RDRM31190 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm31190) Exchange rates) used to acquire or pay for the property or service etc.

This means that where an item of depreciating value (such as a car) is brought to the UK the amount that is liable to tax is not the current value of the car but the amount of foreign income or gains from which the car derives.

For the same reason, where an item of appreciating value (perhaps a work of art) is brought to the UK, the taxable amount is the amount of foreign income or gains from which the property derived, and not its current market value.

The same principle applies where an investment is made in shares or other such financial instruments, and those shares are in, or are otherwise brought, to the UK. The chargeable amount is the amount of foreign income or gains from which the shares derived.

When taken together with any amounts that have been previously remitted (or treated as having been remitted), the taxable amount of income or gain that is treated as having been remitted because of these provisions cannot be greater than the amount of the original foreign income and gains (ITA07/s809P(12)).

Where property is brought to or used in the UK by or for the benefit of a relevant person the amount that is liable to tax is the amount of the underlying foreign income or gains from which the property derives (whether directly or indirectly). The taxable remittance will only occur once; this will usually be the time the asset is first brought to, received by or used in the UK by a relevant person.

See RDRM35010 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm35010) for guidance on when the same foreign income or gains have been remitted more than once. This may occur where more than one type of property, which may be remitted on separate occasions, derive from the same income or gains.

Example 1

Marianne, a remittance basis user, uses £25,000 of her foreign chargeable gains to purchase a car, which she then brings to the UK for her and her daughter to use. The car is regarded as derived from foreign gains.

The amount remitted is £25,000, that being the amount equal to the chargeable gains from which the property - the car - derived.

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Example 2

Greta, a remittance basis user, uses her relevant foreign earnings to purchase a painting for £80,000. After a few months she sells the painting for £80,000 in order to purchase an antique desk. Three years later she swaps the antique desk for a set of silver chalices. Two years on she decides to bring the chalices into the UK for use at her home in Oxfordshire.

The silver chalices are indirectly derived from her relevant foreign earnings, so there is a remittance of £80,000 in the year in which the chalices are brought into the UK.

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Example 3

Johanna is a remittance basis user (refer to the earlier examples). Her 15 year old son Joshua has guitar lessons with a master guitarist, Kurt, every week.

Johanna has a time share apartment in Morocco; she pays £8,400 from her relevant foreign earnings each year which allows her to use the apartment for four weeks every year. In tax year 2013-14 Johanna agrees with Kurt that rather than pay him in cash for the guitar lessons he may use the apartment for two weeks in June 2013.

Here the consideration (the use of the Moroccan apartment) for the service provided in the UK derives indirectly from Johanna’s relevant foreign earnings.

The amount remitted is equal to the amount of income and gains from which the consideration derives that is £4,200.

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Example 4

In example 1 above, Marianne, a remittance basis user, used £25,000 of her foreign chargeable gains to purchase a car. The car is regarded as derived from foreign income and gains.

Instead of bringing it straight to the UK, Marianne kept the car at her Italian villa for use on her visits to Italy. A few years later she then decides to bring the car to the UK for her and her daughter to use. At this time the approximate market resale value of the car is £14,000.

The amount remitted is still £25,000, that being the amount equal to the chargeable gains from which the property - the car - derived. This would be the case even if Marianne sold the car in Italy for its market value of £14,000 and brought the sale proceeds to the UK. The taxable remittance is still £25,000 of Marianne’s foreign gains as that is what the sale proceeds are derived from.

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Example 5

Ali, a remittance basis user, purchases a sculpture in Sweden in 2012-13 for £80,000 using relevant foreign earnings (refer to the earlier examples). Ali gives the sculpture to his wife as an anniversary gift. She keeps it at her mother’s home in Stockholm.

Two years later, in 2015-16 Ali’s wife decides to bring the sculpture to the UK to display in her UK garden. In the meantime the artist who created it has become internationally famous for his work, and the sculptures have appreciated in value to £120,000.

The sculptures are regarded as derived from Ali’s foreign income. As a result of Ali’s wife bringing the sculpture to the UK, Ali has made a taxable remittance of £80,000 in 2015-16, that being the original amount of foreign income used to purchase the sculptures. The property (the sculpture) is the property of a relevant person (Ali’s wife).

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Example 6

Ben purchases shares in a French company using £100,000 of his unremitted foreign income. Unfortunately the company performs badly and several years later Ben sells his entire share holding for £75,000. He transfers the whole of the sale proceeds to his UK account and uses the money to fund his general living expenses in the UK.

Although he has only transferred £75,000 to the UK we need to determine what the money derives from. In this case it derives originally from £100,000 of his unremitted foreign income. As a result of this Ben has made a taxable remittance of £100,000.