RDRM31030 - Remittance Basis: Introduction to the Remittance Basis: Overview of the Remittance Basis regime: What is the Remittance Basis?
Source: gov.uk (2025-04-07)


The remittance basis has been described as an ‘alternative basis of taxation’, to contrast it from the usual basis of UK taxation, known as the arising or accruals basis.

Arising basis

From 6 April 2025 all individuals who are resident in the UK are taxable on the arising basis and pay tax on their worldwide income and gains. So, on the arising basis, the foreign income of UK residents is charged to tax in the year in which it arises overseas. For example, an employee is taxed on the full amount of earnings from a foreign employment for the tax year. Likewise, any capital gains are subject to UK tax in the tax year in which the gain accrues. In most cases that is the year in which the asset is disposed of.

Remittance basis

Prior to 5 April 2025, the remittance basis provided what may be viewed as a ‘deferral’ of the UK tax charge in respect of foreign income and gains, that is, there was no charge when these foreign income or gains arose or accrued.

Instead, foreign income and gains were, and are, only taxed in the UK when they, or amounts ‘in respect of’ or amounts ‘representing’ those income or gains, are ‘remitted’ to the UK. If foreign income and gains remain offshore and are never regarded as remitted to the UK, the tax charge is effectively deferred indefinitely.

Until 6 April 2025, as long as they met the status criteria (refer to RDRM32010 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm32010)), individuals could decide on a year by year basis whether to use the remittance basis. If they chose not to use the remittance basis the arising basis applied. Foreign income and gains were, and are, remitted to the UK if:
- they are brought to, or received in or used in the UK (refer to RDRM33100 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm33100))
- a service is provided in the UK which is paid for overseas using foreign income or gains (refer to RDRM33100 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm33100))
- they are used overseas in respect of a relevant debt in the UK - in simple terms a relevant debt is a debt that relates to property brought to or used in the UK, or a service provided in the UK (refer to RDRM33160 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm33160))
- they are used outside the UK to provide a benefit in the UK (from 6 April 2025)
From 6 April 2025 it is not possible to use the remittance basis of taxation, however, any foreign income or gains that have arisen to a former remittance basis user prior to this date will continue to be taxed at the usual tax rates if they are remitted to the UK on or after 6 April 2025, subject to any amounts designated under the temporary repatriation facility (TRF) – see RDRM71000 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm71000).

Indirect or ‘derived from’ remittances

There may be a taxable remittance even if, on the surface, it appears as if the individual’s foreign income or gains have simply moved around overseas. This will occur when an amount that is received or used in the UK, or a service which is provided in the UK is ’in respect’ of the individual’s income or gain, and/or is said to ‘derive from’ those income or gains.

It is therefore important to identify the exact source of any monies used or consideration given for services in order to determine whether there has been a remittance.

Note: You may sometimes hear this referred to as a ‘constructive remittance’, which is a term largely derived from the older case law. This term is not strictly relevant to the new rules, but if you hear the term you should consider the ‘derivation’ provisions.