To easier to understand the question, I make an example...
Background:
A tax resident and non-domiciled who has immigrated to the UK.
In the first year and second year, he chooses the arising basis.
In the third year, he chooses the remittance basis and sells his overseas property abroad, gaining a capital gain of £100,000. He keeps this amount in an overseas bank and earns an annual interest of £3,000.
From the fourth to the eighth year, he continues using the arising basis. The £100,000 funds held overseas continue to generate bank interest of £3,000 per year for five years, a total £15,000.
(all the interest be placed into a clean account other than the £100,000 Capital gain account)
That is:
1st Year : Arising Basis
2nd Year : Arising Basis
3rd Year : Remittance Basis. Gained £100,000 Capital gain, Earned £3,000 saving interest from this Capital Gain in the year.
4th - 8th Year : Arising Basis. Keep the Capital Gain of £100,000 in an overseas bank, and earned £3,000 in saving interest each year.
Questions:
Q1. In the third year, he chooses the remittance basis:
Q1a. If he does not remit the entire capital gain of £100,000 and the earned interest of £3,000 to the UK, are they both exempt from tax?
Q1b. If he transfers the £3,000 interest to the UK, is he only required to pay tax on the interest that year?
Q2. From the fourth year to the seventh year, he switches back to the arising basis:
Q2a. Can he continue to keep the £100,000 held in the overseas bank CG tax-free?
Q2b. If he remits the annual bank interest of £3,000 to the UK, is he only required to pay tax on the interest without applying for the remittance basis?
Q2c. Since he is adopting the arising basis, can the remitted bank interest be eligible for the tax-free allowance for those years?
Q3. In the eighth year, he continues using the arising basis:
Q3a. Can he continue to keep the £100,000 funds in the overseas bank tax-free?
Q3b. If he transfers the entire or partial amount of the £100,000 to the UK, does he need to apply for the remittance basis and pay the remittance basis charge?
Q3c. If he transfers the entire or partial amount of the earned interest of 3,000 to the UK, does he need to apply for the remittance basis and pay the remittance basis charge?
Q3d. For the transfer amount of 100,000, will the HMRC levy capital gains tax based on the conditions of the capital gain, meaning it will be taxed in the category of the year the profit was obtained (the 3rd year)?
