Remittance Basis Charge (RBC) is a tax applied by the UK government on non-domiciled individuals who choose to be taxed on the remittance basis. Non-domiciled individuals are those who are not considered permanent residents of the UK for tax purposes, but instead are residents in the UK for a temporary period.
The RBC was introduced in the Finance Act 2008, with the aim of increasing revenue for the UK government. Prior to the introduction of the RBC, non-domiciled individuals only had to pay UK tax on their UK earnings and income remitted to the UK. However, with the introduction of the RBC, individuals who have been resident in the UK for 7 out of the last 9 tax years must pay an annual charge of £30,000 to be taxed on the remittance basis. The RBC is increased to £60,000 where an individual has been resident in the UK for 12 out of the last 14 tax years.
The RBC can be seen as a way for the UK government to discourage individuals from taking advantage of the tax benefits of the remittance basis. However, it is important to note that individuals who choose to be taxed on the remittance basis can still benefit from a number of tax advantages, including the ability to avoid UK tax on foreign income and gains that are not remitted to the UK.
It is also worth noting that there are exemptions to the RBC, including for individuals who are less than 18 years old, those who are resident in the UK for less than 7 of the last 9 tax years, and individuals who have a UK tax liability of less than £30,000 on their foreign income and gains.
Overall, the Remittance Basis Charge is a tax that is designed to raise revenue for the UK government from individuals who choose to be taxed on the remittance basis. While it may be seen as a way to discourage individuals from taking advantage of the tax benefits of the remittance basis, individuals can still benefit from a number of tax advantages if they choose to be taxed on this basis. It is important for non-domiciled individuals to seek professional advice to ensure they are making the best decisions for their tax obligations.
Spherical Accountants are tax consultants based in London who can help you with the tax planning of your worldwide income and gains.