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Where Taxpayers and Advisers Meet

Investments: what is a remittance and/or UK source income?

jason13
Posts: 148
Joined: Mon Mar 28, 2011 2:02 pm

Investments: what is a remittance and/or UK source income?

Postby jason13 » Mon May 20, 2019 7:07 pm

What counts as a remittance for the remittance basis in terms of investment income? And how do you distinguish between foreign and UK investment income? Does it matter where my broker is located? Where the fund/shares are domiciled?

Some examples:
  • Broker in Germany, investment in an index fund domiciled in Ireland: I assume a dividend received in that broker wouldn't be a remittance to the UK since the broker is outside the UK and the investment too. Does it matter if the index funds invests in some UK companies?
  • Broker in Germany, investment domiciled in the UK: what about this? If I use a broker in Germany to buy the UK FTSE? Is that a remittance (or UK source income), even if I never transfer the dividends to the UK?
  • Broker in the UK, invested in UK shares/funds: that clearly looks like UK source income to me.
Where exactly are the boundaries of a remittance? And where is this defined?

(BTW, is there a good tax forum for Ireland? I'm trying to answer the same question for Ireland. If you're not domiciled in Ireland, investment income not remitted to Ireland is not taxable there. But a lot of funds have their domicile in Ireland... does that matter?)

AnthonyR
Posts: 268
Joined: Wed Feb 08, 2017 2:33 pm

Re: Investments: what is a remittance and/or UK source income?

Postby AnthonyR » Tue May 21, 2019 9:58 am

If you are a non-dom on the remittance basis I'd seek some formal advice on the subject as responses on a forum aren't likely to be sufficient to cover your position fully. It's a horribly complex area and HMRC have widened the remit of remittances over the years.

In respect of your examples, the first one will depend on the fund, but usually a listed wrapper will obscure the actual underlying investments. The second two are most likely remittances although again the devil in the detail. Having a broker directly buy FTSE shares on your behalf will be a remittance as you have acquired UK situs assets and dividends will be UK source income.

In terms of guidance, the basics are here:

https://www.gov.uk/government/publications/residence-domicile-and-remittance-basis-rules-uk-tax-liability/guidance-note-for-residence-domicile-and-the-remittance-basis-rdr1#the-remittance-basis-of-taxation

To delve into the detail, you'll need to review the HMRC manual on remittances (which runs to about 250 pages - hence the need for professional advice).

https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm30000
Anthony Rogers LLB CTA TEP
Fusion Partners LLP
anthony@fusionpartners.co.uk

maths
Posts: 7535
Joined: Wed Aug 06, 2008 3:25 pm

Re: Investments: what is a remittance and/or UK source income?

Postby maths » Tue May 21, 2019 9:49 pm

The location of the broker is irrelevant in a determination as to what constitutes "relevant foreign income"; such income may fall subject to remittance basis treatment.

Relevant foreign income is income with a non-UK source.

Different rules apply depending upon the category of income EG dividends from a company incorporated and resident outside the UK is non-UK source, A UK resident company generates UK source dividends.

Location of broker irrelevant to the above.


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