Arrival in the UK: split-year treatment and the remittance basis
Mei Lin, aged 38, is a Taiwanese national and non-UK domiciled. She has never been UK resident. She starts a three-year secondment to London on 1 May 2024. Her employment contract is with a UK company, and she earns a UK salary of £110,000. She completes the purchase of a London flat on 1 May 2024, and her husband and two children arrive with her that day. The children start school in September. Mei keeps a house in Taipei, which she visits for 20 days over Christmas. In 2024/25 she is physically present in the UK for 190 days. She also receives Taiwanese dividends of £45,000 and Taiwanese rental income of £18,000, both paid into a Taipei bank account. In March 2025 she wants to remit £25,000 to the UK to buy a car. She asks whether she should claim the remittance basis for 2024/25.
1. Determine Mei's residence for 2024/25 and whether split-year treatment applies.
Read the worked answer
Under the statutory residence test, Mei is automatically UK resident for 2024/25 because she is present in the UK for 190 days, which is at least 183 days.
Split-year treatment can still apply on arrival. She was not UK resident in the previous three years and has no UK ties before 1 May 2024, because the flat completes on the day she arrives. She therefore qualifies for the arrival split-year. The year is split into an overseas part to 30 April and a UK part from 1 May 2024 to 5 April 2025.
The practical effect is that her foreign income for the overseas part is outside UK tax. For the UK part, she is taxed as UK resident, so her foreign income is taxable on the arising basis unless she claims the remittance basis.
2. Advise whether Mei should claim the remittance basis and calculate the tax on the £25,000 remittance.
Read the worked answer
She should claim the remittance basis if she does not need the foreign income in the UK. The £30,000 remittance basis charge does not apply because she has not been UK resident for 7 of the previous 9 tax years. She also keeps her personal allowance because she does not meet that 7-of-9 condition.
If she claims, only the £25,000 remitted is taxed. If it is matched to the foreign dividends, the £500 dividend allowance applies and the rest is taxed at 33.75% at higher rate: (£25,000 - £500) × 33.75% = £8,269. If it is matched to rental income, tax is £25,000 × 40% = £10,000.
Without a claim, all £63,000 of foreign income is taxable on the arising basis: dividends (£45,000 - £500) × 33.75% = £15,019; rental £18,000 × 40% = £7,200; total £22,219. The claim therefore saves tax. She must make the claim on her self-assessment return.
3. Explain why the source of the remitted funds matters and what records Mei should keep.
Read the worked answer
The source matters because dividends and rental income are taxed at different rates. The remittance basis mixes income in the bank account; the ordering rules normally match the remittance to current-year income first. She should keep separate accounts if she wants to control which income is remitted. She should also remember that once remitted, the income cannot be remitted again and the tax is due for 2024/25.
If she later becomes UK resident for 7 of 9 years, a £30,000 charge would apply, and from 2025/26 the remittance basis is being replaced, so long-term planning is needed.