But sometimes, people will only have been made aware of those rules once they are in the UK. Or they might have created a capital account without enough funds to maintain their lifestyle. In those instances, they will have to bring revenue from what the HMRC calls mixed funds. A mixed fund account is an account that has capital and revenue mixed together. If they need to remit funds from such an account, they will have to pay some tax. But the calculation of that tax can very complex because of what the HMRC calls the ordering rules, and which have been in place since 2008.
Each mixed fund account is actually a series of virtual buckets which are increased or decreased every time there is money coming in or out of the account. There are 8 buckets per tax year:
- UK employment income
- Foreign employment income not subject to a foreign tax
- Other foreign income (ie. trade profits, rental income or investment income) not subject to a foreign tax
- Foreign capital gains not subject to a foreign tax
- Foreign employment income subject to a foreign tax
- Other foreign income (ie. trade profits, rental income or investment income) subject to a foreign tax
- Foreign capital gains subject to a foreign tax
- Any funds not covered above (i.e. capital)