Minimising the depletion of ‘clean capital’ by remittance basis users

Generally, foreign income and gains of a remittance basis user are subject to a UK tax charge if remitted to the UK. For this reason, remittance basis users normally try to ensure that if money is brought into the UK, that money is clean capital. However, the UK tax code does provide specific reliefs and exemptions enabling ‘non-clean capital’ to be remitted without a charge arising. This enables the taxpayer to retain their clean capital for other occasions. Opportunities to use foreign income or gains in this way are provided by the relief for payment of remittance basis charges; the relief for payments for certain UK services; the various reliefs for ‘exempt property’; business investment relief; and the limitations of the concept of a ‘relevant person’. The latter can be relevant when gifts are made to children or grandchildren, charities or on divorce.