What Is the Remittance Basis?
The Remittance Basis is a personal taxation method under which foreign income and gains are taxed only when brought into the country of residence.
Also known as: Remittance Basis of Taxation, Remittance-Based Taxation.
How Remittance Basis works
The Remittance Basis is an alternative basis of taxation under which a resident individual is taxed on foreign income and gains only when those amounts are remitted, meaning brought into or used in the country, rather than as they arise, and the United Kingdom applied the most widely known version to residents who were not domiciled there. Under the UK rules the basis generally had to be claimed, eligibility was limited to non-domiciled residents who were not deemed domiciled, and adults claiming the basis could face an annual remittance basis charge on top of tax on remitted income and gains. From 6 April 2025 the UK remittance basis has been abolished, making 2024-25 the last tax year for which a claim could be made. Foreign income and gains which arose before 6 April 2025 may still be taxed if remitted on or after that date, subject to the Temporary Repatriation Facility, while new arrivals who were not UK tax resident in the previous ten years may instead use a four-year foreign income and gains regime. Other countries with remittance-style or territorial rules apply their own definitions of remittance and timing, so outcomes depend on local law, record-keeping and the order in which mixed funds are moved.
Remittance Basis vs Territorial Tax System
Unlike a Territorial Tax System, which in most cases leaves foreign-source income outside the tax base regardless of where funds are used, the Remittance Basis taxes foreign income and gains once they are brought into the country, so timing and use of funds decide liability.
| Remittance Basis | Territorial Tax System | |
|---|---|---|
| Trigger for tax on foreign income | Bringing foreign income or gains into, or using them in, the country | Generally none, because foreign-source income is outside the tax base, subject to local exceptions |
| Who it applies to | Historically a claimed option for eligible residents, such as UK non-domiciled residents until 5 April 2025 | All residents by default under the national system |
| Record-keeping focus | Tracing which funds are clean capital, income or gains when money is moved | Establishing whether income has a domestic or foreign source |
Example
Illustrative example: A consultant who moved to the United Kingdom several years earlier and was not UK domiciled claimed the Remittance Basis for 2023-24 and kept foreign consulting fees in an overseas account. Fees left abroad were not taxed in the UK that year, while an amount transferred to pay a UK mortgage counted as a remittance and was taxed. From 6 April 2025 the consultant can no longer claim the basis, and having been UK resident for several years, the consultant does not meet the ten-year non-residence condition for the four-year regime, so new foreign income is generally taxed as it arises. Fees earned before April 2025 and later brought into the UK may still be taxed, subject to the Temporary Repatriation Facility, which makes the separation of pre-2025 and post-2025 funds, and records of their origin, central to the consultant's position. A different person arriving in the UK after ten years abroad would instead be assessed against the four-year regime conditions.
Common misconception
Myth: Foreign income kept offshore is never taxed by the country of residence.
Reality: The Remittance Basis deferred tax until funds were remitted, required a claim with a possible annual charge, and the UK version has been abolished from 6 April 2025.
Frequently asked questions
What is the remittance basis of taxation?
The Remittance Basis is a method under which a resident individual's foreign income and gains are taxed only when brought into or used in the country of residence, rather than as they arise.
Has the UK abolished the remittance basis?
The UK Remittance Basis was abolished from 6 April 2025, so 2024-25 was the last tax year for which a claim could be made, according to HMRC guidance.
What counts as a remittance?
A remittance generally means bringing foreign income or gains into the taxing country or using them there, for example to pay a domestic debt; each country's legislation sets the precise definition.
What replaced the remittance basis in the UK?
The UK replaced the Remittance Basis with a four-year foreign income and gains regime for new arrivals who were not UK tax resident in the previous ten years, alongside a Temporary Repatriation Facility for earlier income.
Related terms
- Tax Residency — Domestic residence status required before remittance basis rules can apply
- Territorial Tax System — Alternative approach excluding foreign income
- Statutory Residence Test — Decides UK residence before any basis applies
- Worldwide Taxation — Default arising basis the remittance basis displaced
Related guides
- Why digital nomads are leaving the UK — UK non-dom reform and departures
- Thailand tax rules guide — Thailand's remittance-style rules on foreign income
- Portugal NHR regime changes — Another special regime for new residents
Sources
Last verified: 2026-10-09. This entry is general information, not tax or legal advice; rules vary by country and change over time.
