About Clean Capital and Savings

Hi, good day! I have come to Scotland as a BNO visa holder and got some questions in mind about my savings. I have some savings in my foreign bank account. Interests would be paid by the bank based on the savings. And, I got some questions in mind: Assume that: Day I arrived the UK: 01 Aug 2023 Tax year: 2023-2024 I do NOT prefer to use the remittance basis. The Original Amount of Savings in foreign bank account = ￡50000 The Interests I received from the bank before I become a UK-resident (before 01 Feb 2024) = ￡ 700 The Interests I received from the bank after I become a UK-resident (on or after 01 Feb 2024) = ￡ 800 Money transferred from foreign bank account to UK bank account = ￡ 10000 Money given by my parents = ￡ 4000 UK income (wages) = ￡3500 1. Should the interests (￡700 + 800) be defined as "foreign income" or "saving income"? 2. Can "Personal Saving Allowance" and "Starter Rate for Savings" be used on those interests (￡700 + 800) ? 3. Does the money in the foreign bank account (￡700 + 800 + 50000) become "mixed fund" after receiving the interests? 4. Hence, if the money (￡700 + 800 + 50000) has become "mixed fund", would it be defined as "clean capital" again after I reported the interests to HMRC and paid for the tax? 5. Hence again, if I transferred my interested to another foreign account, can my original savings in the original account be defined back to the "clean capital"? 6. In the tax year , would the interests, received before I become a UK-resident(￡700), be taxable? Or, I have to report all my interests(￡700 + 800), received after 06 Apr 2023, to HMRC in the upcoming year? 7. If I would like to transfer my money ( ￡ 10000) from foreign bank account to my UK bank account, would all the money transferred (￡ 10000) be defined as my income? Or, only the value of interests (￡700 +/ 800) of the money transferred (￡ 10000) would be taxable? 8. If I transferred my money (￡700 + 800 + 50000) to UK bank account after I paid for the necessary tax next year, any other tax will be charged? 9. If I transferred my money (￡700 + 50000) to UK bank account before I become a UK-resident (before 01 Feb 2024), any other tax will be charged? 10. Is the money given by my parent (￡ 4000) taxable? Would it be defined as my income? 11. Finally, can you assist to set out the formula how I should calculate? I am sorry that I have a load of questions since I am really confused. Looking forward to your reply and advice. Thanks and regards. Have a nice day.

Hi,

On arrival in the UK, you will need to take the residency tests, to determine whether your are considered resident for tax purposes for the full tax year. If you are, then you will need to determine if split year treatment applies to you. If it does, you would claim split year treatment on SA109 and only declare your income and gains from the date you arrived in the UK, in a self assessment tax return (SA100).  Income and gains for the period before you come to the UK, would not be taxable here.

Any foreign interest that is taxable in the UK, is declared as foreign interest on SA106, where you can declare any foriegn tax paid on the interest and claim a tax credit.

Personal allowance are allowed automatically, where you are considered resident in the UK for tax purposes for the full tax year and split year treatment does not apply. All your world wide income in the tax year would be declared in the tax return.

If the capital in the foreign savings account arises in tax years where you are not resident in the UK, then it would not be taxable, if remitted to the UK and does not need to be declared, only the interest it generates would need to be declared.

If split year treatment applies, then only the income and gains arising in the period you are resident in the UK would need to be declared.

Transferring capital from a foreign account  to a UK account would not be taxable, unless all or part of the capital arise from income or gains the the tax year you arrived in the UK.

This is still the same even if you are not resident in the UK at the time of the transfer and become resident part of the way through the tax year.

When HMRC calculates how much tax you need to pay, it looks at your non-savings income first, followed by your savings income, and then your dividend income.

UK tax legislation requires income and gains to be taxed in a fixed sequence.  This sequence is 'non' savings income, savings income, dividends, chargeable event gains and followed by capital gains.

Non savings income is the likes of 'employment' income, 'self employment' income, 'partnership' income and 'property' income.  next comes 'savings income', which is tax and untaxed interest, which is always followed by dividends.

Thank you.

Thank you very for your reply in details. I believe I got the answers for some of the questions above. But I am still confused about the others. Based on the below assumptions, would you mind to set out a formula about how to calculate my tax of 2023-2024 tax year? I believe this will really help me to understand the tax calculation. Assume that: Day I arrived the UK: 01 Aug 2023 Tax year: 2023-2024 I do NOT prefer to use the remittance basis. The Original Amount of Savings in foreign bank account = ￡50000 The Interests I received from the bank before I become a UK-resident (before 01 Feb 2024) = ￡ 700 The Interests I received from the bank after I become a UK-resident (on or after 01 Feb 2024) = ￡ 800 Money transferred from foreign bank account to UK bank account = ￡ 10000 Money given by my parents = ￡ 4000 UK income (wages) = ￡3500 Thank you for your assistance and looking forward to hearing from you

Hi,

HMRC are unable to answer this for you. your residenance and remittance basis is for you to determine. however, we can confirm, if you are not claiming the remittance basis you are liable on all your income received. You may therefore want to speak to a financial adviser.

Thank you.