Finance Bill Tracking Service 2010 | Budget 2010


Who is likely to be affected?

1. Individuals who are resident but either not domiciled or not ordinarily resident in the UK.

General description of the measure

2. The remittance basis is an optional basis of taxation available to individuals who are resident but either not domiciled or not ordinarily resident in the UK. Individuals who choose to use the remittance basis will be subject to UK tax on their foreign income and gains only when they are remitted to the UK, rather than on their total worldwide income and gains.

3. Finance Act (FA) 2008 introduced significant changes to the remittance basis which became effective from 6 April 2008. Minor amendments to these rules were made in FA 2009 which were designed to make the rules clearer and simpler to operate in practice. Finance Bill 2010 introduces a further minor amendment to the remittance basis.

Operative date

4. This change will have effect on and after 6 April 2010.

Current law and proposed revisions

5. The concept of relevant person was introduced in FA 2008 to ensure that any foreign income or gains of an individual which are remitted to the UK by way of any relevant person, or for the benefit or enjoyment of any relevant person, are taxed on the individual. A relevant person is widely defined and includes the individual, their spouse, civil partner, children and grandchildren under the age of 18. It also covers close companies and their subsidiaries in which such persons are participators.

6. However, it is not explicit that references to a close company are intended to include subsidiaries of non-resident companies which would be close companies if they were resident in the UK. To remove any uncertainty, and to remove the potential for abuse, the legislation will be amended to make clear that a relevant person includes such companies.

7. A relevant person is defined in section 809M of the Income Tax Act 2007.

8. This measure amends section 809M to clarify that a subsidiary of a non-UK resident company which would be a close company if it was resident in the UK will be treated as a relevant person for the purposes of the remittance basis.

Further advice

9. If you have any questions about this change, please contact or telephone 020 7147 2599. Information about Budget measures is available on the HM Revenue & Customs website at