ACCA Advanced Taxation (ATX) Practice Exam

What is most important about the remittance basis charge?

1. It applies automatically to all non-residents

2. It is only assessed on individuals who have claimed the remittance basis

3. It is dependent on the value of worldwide income

4. It cannot be claimed by individuals residing in the UK

The correct answer is: It is only assessed on individuals who have claimed the remittance basis

The remittance basis charge is a crucial concept in the UK tax system, particularly for non-domiciled individuals who reside in the UK but have income and gains from outside the UK. It is significant because it only applies to individuals who have chosen to claim the remittance basis of taxation for their UK tax purposes. When an individual claims the remittance basis, they are only taxed on their UK income and on foreign income and gains that they bring into the UK. However, if their foreign income and gains exceed a specific threshold, a remittance basis charge is applied. This means that only those who actively claim this basis and whose income and gains are above the stipulated limits will incur this charge. This concept illustrates the specificity of the remittance basis charge, as it is not an automatic tax for all non-residents, nor is it determined by the total value of worldwide income. Additionally, it applies to those who opt into this regime, rather than being an obstacle for individuals residing in the UK. Understanding this targeted application helps clarify tax liabilities and obligations for eligible taxpayers in the UK.