Have you received a ‘remittance basis charge’ letter from HMRC?

Here’s what you need to know

HMRC has started sending out letters to high-net-worth taxpayers and their agents.

The letters will be sent to those who have been tax resident in the UK for 7 out of the last 9 years and 12 out of the last 14 years.

Why is HMRC writing?

These taxpayers have been identified as needing to pay the remittance basis charge (RBC) of either £30,000 or £60,000 – or alternatively move to the arising basis of taxation.

The letter explains the steps required and provides advance guidance when filing out 2021/22 Self-Assessment tax returns (SA109), making it clear than any amendments to a 2020/21 return should be done within 60 days. If no amendment is made, HMRC may open an enquiry to check the correct tax position.

The guidance is being clarified to make the Residence Domicile and Remittance Basis Manual (RDRM32220) clearer for taxpayers regarding the year count for remittance basis purposes.

It reinforces the position that as a taxpayer, you must be tax resident in the year of arrival, departure, and split year (or both) to count as a year of residence for remittance basis charge purposes.

The update ensures such years are accurately reflected in the year count and aids preparation of tax returns.

It is important to note that even if you are not liable to pay the RBC, if you have not declared any overseas income to HMRC, you must contact them to check if it needs to be declared to avoid being penalised.

Need help or advice?

If you are confused by HMRC’s latest guidance or need help and advice to prepare and submit your self-assessment tax return or calculate the correct remittance basis charge, please get in touch with the team at Rotherham Taylor today.