Pilar came to the UK when she began working here in autumn 2002. She was born with Spanish domicile and intends to retire to Barcelona where she grew up. When she moved to the UK, she continued to keep a modest amount of savings in a deposit account in Spain. As she has sufficient income from her work in the UK, she doesn’t normally draw on the offshore bank account. Now that it is time to prepare a Self-Assessment Tax Return for 2017/18, the question has arisen of how the taxing of the offshore interest has been affected by the rule to deem people to have UK domicile being extended to Income Tax and Capital Gains Tax.
Pilar will be deemed to be UK domiciled for the year 2017/18 because she has been UK resident for 15 of the 20 years immediately preceding it. This means that she is not able to make a claim to use the remittance basis in 2017/18. However, it is worth noting that this deeming rule, which can be found in the Income Tax Act 2007 at section 835BA is not the end of applying the remittance basis to offshore income and gains in all circumstances. As that section makes clear, it affects only Income Tax and Capital Gains Tax provisions which apply it. So, for instance, one of the provisions affected is the claim to remittance basis. Pilar can’t make a claim to the remittance basis this year. However, if her unremitted offshore income and gains for 2017/18 doesn’t exceed £2,000, then the remittance basis applies to those income and gains without a need for Pilar to make a claim and this treatment is unaffected by her deemed domicile. In those circumstances, she just needs to include Residence Pages in her return and ensure that Box 29 on the third page has been ticked.