What does section 359 of the Income Tax (Trading and Other Income) Act 2005 do?

Section 359 establishes how the amount of income subject to an income tax charge is determined. For UK-source income, the full amount arising in the tax year is charged. For non-UK income, the charge may be modified where the taxpayer qualifies for the remittance basis of assessment, so only income remitted to the United Kingdom is taxed.

How does the remittance basis affect the income tax charge under section 359?

Where the remittance basis applies, only foreign income actually brought into the United Kingdom is charged to tax, rather than the full worldwide amount. This basis is available to certain UK-resident individuals who are not domiciled in the UK, and the detailed rules are set out in section 832 of the same Act.

Who is eligible to use the remittance basis under section 359?

The remittance basis is available to certain UK-resident individuals who are not domiciled in the United Kingdom. Rather than being taxed on all worldwide income as it arises, eligible individuals are only taxed on foreign income to the extent it is actually remitted to the UK during the tax year in question.

What happens if a non-UK domiciled individual does not claim the remittance basis?

If a non-UK domiciled individual does not claim the remittance basis, the full amount of their worldwide income is charged to income tax as it arises during the tax year, regardless of whether it has been brought into the United Kingdom. This is the standard arising basis of assessment under United Kingdom tax law.

Income Tax (Trading and Other Income) Act 2005 section 359

Income charged

Section 359 establishes how the amount of income from certain sources is determined for tax purposes, including the application of the remittance basis for non-UK income.

The section specifies the amount of income that is subject to an income tax charge.
For UK-source income, the full amount of income arising in the tax year is charged.
For non-UK income, the charge may be modified where the taxpayer qualifies for the remittance basis of assessment.
Where the remittance basis applies, only income actually brought into (remitted to) the UK is charged to tax, rather than the full worldwide amount.

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