Claiming the £30,000 and £50,000 RBC

£30,000 RBC Once a non dom has been UK resident for at least 8 tax years they will then need to consider whether to claim the remittance basis and pay the £30,000 remittance basis charge. If the UK tax on the overseas income was less than £30,000, you would opt for the arising basis. For example, in terms of tax on income for a higher-rate taxpayer, it would generally only be if unremitted overseas income exceeded £83,105 that it would be worthwhile opting for the remittance basis. This would then compensate for the loss of the personal allowance (£8,105 in 2012/2013) and would cover the additional £30,000 tax charge. If you were a very high income earner and taxed at 50% (reducing to 45% from 6 April 2013) you would only need to have foreign unremitted income exceeding £60,000 to make it worthwhile (you would lose the personal allowance in any case due to having income substantially above £100,000). It is this type of analysis that non UK domiciliaries will need to make on an annual basis to determine which is the best option for them. Of course where the overseas income is large, claiming the remittance basis may be far and away the best option. This will apply particularly to capital gains on overseas assets where large sums can be involved. In this case paying a £30,000 tax charge could represent only a very small proportion of the actual proceeds. £50,000 RBC Exactly the same analysis will apply to the new £50,000 charge once a non-dom has been UK resident for 12 tax years. You'll therefore have: • The first 7 years of UK residence where no charge is payable • The next 5 years of UK residence where the £30,000 charge is payable • If you remain UK resident you'll then have to pay the £50,000 charge. Of course in all cases you could just opt for the arising basis, be taxed on your worldwide income and not have to pay any Remittance charge at all. Once you have to pay the £50,000 RBC though your break even point will obviously change a lot. If you have just overseas capital gains, the break-even point as a higher-rate taxpayer would be £178,571. This is calculated as: £178,571 x 28% = £50,000 In addition, when you add the annual exemption of £10,600 to the calculation, the minimum overseas gain you would need before it is worth paying the £50,000 tax charge would be £189,171. If you have no other taxable income, any gains would be taxed at 18% up to £34,370 (the basic-rate band for the 2012/13 tax year). Above this they would be taxed at 28%. In this case you would need to have unremitted gains of at least £201,445 before it would be worthwhile claiming the remittance basis and paying the £50,000 tax charge: If you have unremitted income it's likely that you would be paying income tax at the additional rate (50% for 2012/2013) on at least part of your income before it would make sense to claim the remittance basis and pay the £50,000 tax charge. Of course if all your income was taxed at 50% you'd need to have £100,000 of unremitted income before it would be worthwhile. If there was no other UK income then you'd need to have unremitted income of around £142,200 before claiming the remittance basis and paying the £50,000 charge made sense. Of course the good thing about the remittance provisions is that you can swap between the remittance basis and arising basis as you please. Therefore even with over 12 years of UK residence, just one year of exceptional foreign income or capital gains could make claiming the remittance basis worthwhile.