The guidance on the application of the remittance basis rules

HMRC published new guidance on 4th August 2014 in respect of the remittance rules surrounding offshore loans to non domicilaries.

Previously, non-doms were able to secure their offshore loans against offshore assets (income/gains) and bring the loan to the UK without triggering a remittance as long as the interest/capital loan repayments were not made from offshore funds.

HMRC have revised their stance on this. If loans are secured against overseas assets, it will be deemed to be a remittance of that collateral.

Furthermore, if the capital/interest repayments on the loan are paid using the different foreign income/gains i.e. from a different offshore bank account, there may be another tax charge on the same remittance.

Those individuals with existing loans have two choices going forward;

  1. Repay the loan prior to 5th April 2016.
  2. Write to HMRC by 31st December 2015 and replace the foreign income and gains with UK assets as collateral for that loan.

It must be noted that those who keep the foreign income/gains as collateral at 6th April 2016 for the loan will have a taxable remittance on that date.

Individuals taking up loans after 4th August 2014 and using foreign income and gains as security will automatically be treated as having a tax remittance on the date that the loan is taken out.

The information in this article is believed to be factually correct at the time of writing and publication, but is not intended to constitute advice.  No liability is accepted for any loss howsoever arising as a result of the contents of this article. Specific advice should be sought before entering into, or refraining from entering into any transaction.