Remittance/arising for non doms

Last time around I was on a remittance basis as I had a big U.K. Salary and I honestly didn't remit anything. This time I'm planning to move back and it seems to me that the current rules make it unjustifiable to use the remittance method for anyone but the seriously wealthy who have other sources of funds in the U.K. Itself. First, the record keeping is onerous. Second you lose out on personal allowance and any dividend relief. Third, it seems mighty easy to slip up accidentally and mix funds and then get into a huge mess.  Fourth, the delta between us and U.K. Rates is small enough that it shouldn't be a huge extra charge. Am I simply being lazy? Or have most people found that all in all life is simpler with the arising method?


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When I first came to the UK, I went on the arising basis. In line with HMRC rules at the time, I only paid UK tax on 50% of my UK earned income.

HMRC rules, which are variable according to the government of the time objectives, are always subject to change. What applies today may not be what applies in 7 years time.

Nonetheless, it's always been my opinion that unless one knows, beyond doubt, their residence in the UK will be limited to 5 or 6 years and afterwards they will never return to the UK, the arising basis is the simpler choice. Obviously, computations are required if the remittance basis is considered and a capacity for accurate accounting may have a bearing on the decision.

As always, it comes down to personal circumstances and a personal decision (will your revenue streams be measured in millions?).

Millions of pence, yes!  Thanks for the comment which makes sense.


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additionally, there are lots of things to watch out for if you stay on the arising basis though if you still have real estate / income / capital gains in the US:

* if you have any dividends/interest/capital gains in the US, they will be subject to UK tax at generally higher rates than what you pay in the US. You would generally have to top up the tax you paid in the US on these items to the relevant marginal rates in the UK
* if you have any LLCs in the US, they can be subject to punitive treatment in the UK (as an example, if you rent out a property in the US through an LLC, you could have to pay UK tax on the post-tax profit of the US entity)
* generally the rules are different for the treatment of property tax deductions (there is no depreciation in the UK e.g.) so you will need to reclassify your income and expenses into the two different systems and calendar years to ensure you pay the necessary amount of UK tax on it

I would like to add a few observations to cloudsourcetax’s excellent comments and, in particular, on the first bullet point.

If the arising basis is used, the more accurate way of looking at the tax situation on US dividends, interest and capital gains is perhaps to say that UK tax will be payable, and the US should give credit for the UK tax against the domestic US liability. The question is then whether there is a material overall increase in the total tax burden.

The other factors to consider are the use of the remittance basis deprives the income tax personal allowance, the capital gains tax exemption and, on dividends, the dividend rates of tax on any dividends that are remitted. Plus, if the arising basis is used,  there is no build-up of contingent tax on unremitted income and gains and the work in tracking non-remitted amounts.

On US dividends, my calculations show that there is not generally a material additional overall tax if the arising basis is used.

I would like to add a few observations to cloudsourcetax’s excellent comments and, in particular, on the first bullet point.

If the arising basis is used, the more accurate way of looking at the tax situation on US dividends, interest and capital gains is perhaps to say that UK tax will be payable, and the US should give credit for the UK tax against the domestic US liability. The question is then whether there is a material overall increase in the total tax burden.

The other factors to consider are the use of the remittance basis deprives the income tax personal allowance, the capital gains tax exemption and, on dividends, the dividend rates of tax on any dividends that are remitted. Plus, if the arising basis is used,  there is no build-up of contingent tax on unremitted income and gains and the work in tracking non-remitted amounts.

On US dividends, my calculations show that there is not generally a material additional overall tax if the arising basis is used.

Thanks for all the comments. The other thing that does my head in is the different end dates for the tax year! If the U.K. has first claim on taxing the dividends, as I understand, is there then always about a 12 month delay before you get any relief on the US side? Or is there a way of managing things so it is more or less in balance? Prepayments on estimated U.K. Tax for example, if such a thing exists.


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Thanks for all the comments. The other thing that does my head in is the different end dates for the tax year! If the U.K. has first claim on taxing the dividends, as I understand, is there then always about a 12 month delay before you get any relief on the US side? Or is there a way of managing things so it is more or less in balance? Prepayments on estimated U.K. Tax for example, if such a thing exists.


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This is correct, standard planning for US persons who are UK resident would be to pre-pay UK tax by 31 December each year; to enable adequate foreign tax credit to be claimed in the US.

This is correct, standard planning for US persons who are UK resident would be to pre-pay UK tax by 31 December each year; to enable adequate foreign tax credit to be claimed in the US.

Thanks a lot.


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There's an interesting video a US UK Tax Advisory company did which really explains what's happening.

Take a look:[https://vimeopro.com/user41187900/wdtv-non-dom-changes]

There's an interesting video a US UK Tax Advisory company did which really explains what's happening.

These changes are of little significance to US persons, most of whom would always have been on the arising basis. We will only really know what is happening with the non-dom changes only after the Finance Bill clauses are published; which is not yet...

I would like to amend a comment which I made in an earlier post on this question. I had said the following

On US dividends, my calculations show that there is not generally a material additional overall tax if the arising basis is used.

I have looked further at the calculations and I think that there can be significant increased overall tax, because of the detail of how the US rules on resourcing works. I would be interested to know of the experience of others in this area.

Now you have confused me! Could you please explain how the resourcing rule is a problem in this case? Thanks


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The double tax treaty between the US and the UK deals with the position of UK resident US citizens.

The UK taxes the income of the individual, as the individual is UK resident. The income includes US source income.

The US taxes its non-resident citizens. It is required under the treaty to give credit for UK tax on US income. This is done by deeming for this purpose some US income to be “resourced” to the UK. Having resourced some US income to the UK the US rules on foreign tax credits can then operate to give relief against US tax.

The double tax treaty between the US and the UK deals with the position of UK resident US citizens.

The UK taxes the income of the individual, as the individual is UK resident. The income includes US source income.

The US taxes its non-resident citizens. It is required under the treaty to give credit for UK tax on US income. This is done by deeming for this purpose some US income to be “resourced” to the UK. Having resourced some US income to the UK the US rules on foreign tax credits can then operate to give relief against US tax.

Thanks - that I understood. I get that the U.K. Rates are higher - potentially 32.5 or even 38.1 vs. 15 or 18.8 but the difference should flow back as a credit. I guess the question is whether one ever enough income or us tax to use the credits to offset against.

At low levels the U.K. Situation is nicer than us with a 5k tax free dividend allowance. And at basic tax levels the 7.5 rate is better than the us.

So those who are trapped are those who get pushed to the higher uk rate without anything to use the credits against.

Am I getting that right?


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I would like to comment further on this.

On dividends, the UK would tax US dividends under normal domestic rules. When it comes to the US I do not think that the use of the foreign tax credits, having resourced income to the US would result in minimal tax. The minimum US tax would be 15%, being the withholding tax that would have been levied on UK resident non-US citizens. Would others agree with this conclusion?