Income Tax Act 2007 section 809J

Section 809I: order of remittances

Section 809J sets out the ordering rules that determine which categories of foreign income and gains are treated as remitted to the UK in a given tax year when the remittance basis charge under section 809I applies.

• When foreign income or gains are remitted, they are matched first against unremitted foreign income and gains of the current year, working through eight categories in a specific priority order — starting with untaxed earnings and ending with foreign-taxed chargeable gains.
• If the current year's unremitted foreign income and gains are insufficient to absorb the total amount remitted, the matching process rolls back to the most recent earlier year in which the remittance basis applied, and continues working backwards until all remitted amounts are matched.
• Where a remitted amount falls partly within a single category, only a proportionate share of each type of income or gain in that category is treated as remitted, preserving the relative composition of that category for foreign tax credit purposes.
• The eight categories distinguish between four types of foreign income and gains — foreign earnings, foreign specific employment income, relevant foreign income, and foreign chargeable gains — each split into amounts not subject to foreign tax (matched first) and amounts subject to foreign tax (matched afterwards).