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Posted Fri, 21 Oct 2022 16:16:58 GMT by Jack
I am a retired, non-domicile, person came to the UK in 2020 and I will apply ILR and Citizenship a few years later. I reported my self assessment using arising basis and I brought enough money to the UK for my living during the tax year 2020/2021. I also live in my own house. Therefore, I do not need to bring more money from overseas for the next 10 years even though I have no local income from within UK. By the time I apply ILR and Citizenship, I expect that I will still have, say GBP500k, savings. For tax years 2021/2022 to 2024/2025, I have 2 choices: A. If I report my tax using arising basis, I will need to pay some tax for my only incomes from overseas. B. If I report my tax using remittance basis, I will need to pay no tax because I remit no fund to the UK. My question is will my ILR / Citizenship application be affected if I choose (B) claim the Remittance Basis? Note: Someone told me that if I pay no tax by claiming Remittance Basis, it means I have no contribution to the UK. (I do not agree this view) Therefore, I will have trouble when I apply ILR / Citizenships.
Posted Tue, 25 Oct 2022 14:06:02 GMT by HMRC Admin 2
Hi,

For Income Tax and Capital Gains Tax purposes, whether or not you’re domiciled in the UK may affect what UK tax you pay on any foreign income and gains during a tax year.  

If you’re UK resident but are not domiciled in the UK, you may have to pay UK tax on any income and gains which arise or accrue here. You can choose to pay tax on your foreign income and gains using the remittance basis of taxation.  You normally acquire a domicile of origin from your father when you’re born (see also ‘domicile of dependence’). Domicile can change for a number of reasons and you could be considered as 'deemded domiciled'.  

The remittance basis is an alternative tax treatment available to people who are UK resident but not domiciled in the UK and who have foreign income and gains. You should review the guidance which can be found at the link below, to help decide how long you can claim the remittance basis.  

Guidance note for residence, domicile and the remittance basis: RDR1

Thank you.
Posted Tue, 25 Oct 2022 14:54:57 GMT by Jack
Thank you for your reply. My question is: Will claiming Remittance Basis affect my future ILR / Citizenship application? The professional told me that it is an obvious advantage, financially, to claim Remittance Basis because I ONLY have foreign income and NO local UK income. Meaning I will not need to pay any tax until I remittance the un-remitted balance to the UK, which will not happen before I apply Citizenship. On the other hand, I will need to pay some taxes if I choose Arising Basis for tax reporting. My concern is some friends interpreted this as: I have no contribution to the UK if I choose Remittance Basis. (I do not agree this view) Therefore, I will have consequences when I apply my ILR / Citizenships. The tax professional could not give me advice on this concern.
Posted Thu, 27 Oct 2022 15:21:00 GMT by
Hi Jack,

As your citizenship application is outside the scope of HMRC, we are unable to comment on what may impact your application.

Thank you.

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