Arriving in the UK: residence, domicile and the remittance basis
Elena, a Brazilian national, moved to London on 1 May 2025 to start a job paying £80,000. Her husband and two children remained in Brazil. She kept her Brazilian home, where her family lives, and returns there most weekends and holidays. In 2025/26 she spends 220 days in the UK. She has £20,000 of Brazilian rental income and £15,000 of Brazilian dividends, both paid into a Brazilian bank account. She has never lived in the UK before and is domiciled in Brazil. She needs £10,000 of the overseas income to help buy a flat in London. She asks whether she is UK resident, whether she can use the remittance basis, and whether claiming it would save tax. Assume she has no other income and is not eligible for the personal allowance under any double tax treaty.
1. Determine Elena's UK residence status for 2025/26 under the statutory residence test.
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Under the statutory residence test, Elena is automatically UK resident if she spends 183 days or more in the UK in the tax year. She spends 220 days, so she is UK resident for 2025/26. It does not matter that her family remains in Brazil or that she has a Brazilian home. The 183-day test is conclusive for residence. She is not automatically non-UK resident. Her residence starts under the split-year rules from the date she arrives, but she is resident for the year.
2. Explain whether she can claim the remittance basis and compare the tax cost of claiming versus the arising basis.
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Elena is UK resident but non-UK domiciled, so she can claim the remittance basis. She has been UK resident for only one year, so no £30,000 remittance basis charge applies. If she claims, only the £10,000 she remits is taxed in the UK. She loses the personal allowance because she is not an EEA national and no treaty gives it. On £80,000 salary, losing the £12,570 allowance costs about £5,028 at 40%. Tax on the £10,000 remittance at 40% is £4,000, so total tax on salary plus overseas income is about £28,460. On the arising basis, she keeps the allowance but pays 40% on £35,000, i.e. £14,000, making about £33,432. Claiming saves about £4,972, so it is beneficial if she remits only £10,000.
3. What practical steps should she take if she claims the remittance basis, and what are the risks?
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She must claim the remittance basis on her self-assessment return by the relevant deadline. She should keep overseas income in a separate, clean bank account and nominate it for remittance basis purposes. She should avoid mixing overseas capital with income, because remittances are matched against income and gains in a beneficial order. She should record what she brings to the UK and pay tax on it. The claim must be reviewed annually: after seven years of UK residence, a £30,000 charge may apply, and after 12 years the charge is higher. If she later needs to remit large amounts, the arising basis may be better.