Moving "clean" capital from overseas for UK Tax Residents and Domiciles

In a few months, I and my spouse will be moving from the US to the UK to begin long-term jobs. From what I can tell, we will both become UK tax residents and domiciles ("domicile of choice") shortly after arrival, since our primary (only) jobs and residences will be in the UK. We have savings that we have accumulated from our previous US jobs that is contained in a variety of savings accounts and investment accounts in the US. I have come across many resources stressing the importance of setting up "clean" capital (i.e. no interest or dividends paid, etc) prior to UK residence such that funds may be transferred to the UK without being subject to UK tax. This would suggest selling all of our investments and keeping them in a "clean" account prior to relocating to the UK. However, nearly all of the information I've found on this front is targeted to non-domiciled residents who are taxed on the remittance basis (i.e., when the clean capital is remitted to the UK). My question is whether similar advice should also apply to *domiciled* residents who wish to bring over funds? We would like to transfer these US savings for a down payment on a UK property (primary home). I have read through the documentation about the difficulty of working with mixed funds accounts and would like to avoid the headache by getting our affairs in order, if possible. I have a follow-on question about clean capital accounts, joint account ownership, and split tax years. In our coming relocation, I believe I will be a split-year resident for 2023, but my spouse might not be (since she was also a tax resident for part of 2022). We have joint US savings accounts. Would it be easier to demonstrate a "clean" account if the savings were in an account only in my name? Thank you

Hi Ian,

You are correct in that the guidance is geared for non domiciled as they can choose to use the remittance basis.
If you are a UK tax resident and deemed domicile then you do not have this choice and are taxed on your worldwide income even if not remitted to the UK so it doesnt matter if the accounts are clean or mixed.

Thank you.

Thank you for your response. I understand that US income earned while a UK tax resident and domicile is subject to UK tax. My question was specifically about savings earned from US income *prior* to be coming a UK tax resident and domicile. For example, I now have money in various US savings and investment accounts. I am not yet a UK tax resident or domicile. I will be moving to the UK to start a new job in a few weeks. Thank you.

Hi
For this the income would all need to be from one source so it would need to be a clean account.
You would therefore not be able to move all the accounts into one as the income in each original account is from a different source.
It would still be mixed funds.
Thankyou.

Hi, thank you for your response, though I don't understand it. In my question, I am specifically talking about US funds acquired before becoming a UK tax resident and domicile (i.e., savings, but these savings were accrued from income in previous years). Are you saying that any UK tax resident domicile would be taxed on savings that they transfer into the country from abroad?

Hi,

Yes, as it is classed as a remittance. You can see information here:

Remittance basis 2023 (HS264)

Thank you.

Thank you for your response. I have read the Remittance basis documentation you linked and addition documentation (https://www.gov.uk/government/publications/residence-domicile-and-remittance-basis-rules-uk-tax-liability/guidance-note-for-residence-domicile-and-the-remittance-basis-rdr1). I am confused by your last response that savings transferred into the country from abroad are a remittance and subject to tax. As I mentioned in my first post, these are US savings from US income accrued *prior* to moving to the UK and becoming a UK tax resident. There have been no new US income or gains (save a tiny amount of bank interest) since becoming a UK tax resident. If this is true, then how does this reconcile with other advice that savings are not considered income (for example, https://community.hmrc.gov.uk/customerforums/pt/53b641b0-f565-ed11-97b2-00155d3ba57b#:~:text=The%20remittance%20basis%20relates%20to,may%20be%20subject%20to%20tax. ) ? Thank you.

Hi Ian,

If you bring the income into the UK it is seen as a remittance - Commonly foreign income and gains are ‘remitted to the UK’ if they (or something deriving from them) are:

brought to, or received in, or used in the UK by you or another relevant person
brought to, or received in, or used in the UK for your benefit or that of another relevant person
used to pay for a service provided in the UK to you or another relevant person
used to pay for a service provided in the UK for your benefit or that of another relevant person
used outside of the UK for a relevant debt in the UK  
                                                                                                                                                                                                                                                                                                              if not brought to the UK and you are claiming the remittance basis then it doesnt need to be reported.

Thank you.

I think my essential question here is whether savings accrued prior to becoming a UK tax resident can be brought to the UK tax free or are they classified as a remittance and I need to pay tax. Your answers about remittance income suggest that I do need to pay tax, but other answers I've read on this form suggest this is savings and OK to transfer, so I am still confused. For example, I was a US citizen and worked a US job until 2022, saving money from income from a job. In 2022, the job and all income from it stopped. In summer 2023, I moved to the UK and became a UK tax resident, for the first time in my life. Before summer 2023 I was never a UK tax resident. Now, in 2023, I would like to transfer the money to the UK. Is this a remittance (pay tax) or is this a transfer of savings (no tax)? Thank you.

Hi Ian,
As per the Remittance basis 2022 (HS264)
Commonly foreign income and gains are ‘remitted to the UK’ if they (or something deriving from them) are:
Brought to, or received in, or used in the UK by you or another relevant person.
Brought to, or received in, or used in the UK for your benefit or that of another relevant person.
Used to pay for a service provided in the UK to you or another relevant person.
Used to pay for a service provided in the UK for your benefit or that of another relevant person.
Used outside of the UK for a relevant debt in the UK.                                                                                                                                                                                                                                                                                                                                                                                       
 If you therefore use the savings for any of the above, it is taxable income.

Thank you. 
 

Hi I came across this post and wondered if there was any conclusion as I may be in a similar position. I have savings in an offshore account that arose via transfer of my salary from overseas employment whilst I was UK non-resident (I am a UK national). I have never been taxed on the remittance basis nor am I now. As a non-resident when the income arose, there was no tax payable in the UK. I am also trying to establish whether now, as a UK resident, transfer of the offshore savings to a UK account will incur tax. I reiterate, the source of funds was income earned whilst non-UK resident that was not taxed on the remittance basis. It’s a very confusing picture for me.

Hi,
Please refer to:
Paying tax on the remittance basis (Self Assessment helpsheet HS264
Thank you.