What does the remittance basis stipulate?

The remittance basis is a unique tax treatment primarily applicable to individuals who are residents in the UK but not domiciled there. This basis allows these individuals to be taxed only on their UK-sourced income and gains. Therefore, if a person is on the remittance basis, they are not required to pay UK tax on income and gains that they earn abroad unless that income is brought into the UK. This means that only income generated within the UK is subject to taxation under this arrangement, aligning with the principles established for non-domiciled residents.

This approach provides flexibility for those who have significant overseas income or gains, as it can lead to substantial tax savings for individuals who can manage their finances effectively to avoid bringing overseas income into the UK. Thus, the correct interpretation of the remittance basis is that only UK income is taxed, allowing non-domiciled residents to potentially limit their tax liability significantly.