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Posted Thu, 20 Jan 2022 22:32:44 GMT by Iurii
Hello, I invested USD two years ago in a mutual non-reporting fund incorporated in Grand Caiman. At that moment, I was a tax resident of another country. Now I am a UK tax resident, so I am trying to figure out the tax consequences of a disposal of shares of this fund: 1. Am I correct that gain from the disposal of the shares is taxed as income? 2. The gain should be calculated in GBP, so I need to convert a buy/sell price of the shares from USD to GBP and calculate it using GBP amounts. Could I use monthly exchange rates from https://www.gov.uk/government/publications/hmrc-exchange-rates-for-2021-monthly for a corresponding buy/sell date? If not, where could I find the right ones? 3. My broker has a buy/sell fee. Could I deduct these fees from the gain? 4. How should I declare the gain? How should I calculate a tax to be paid? 5. If the gain in GBP is negative, should I declare it? Could you please help me to find the answers? Thank you very much.
Posted Fri, 21 Jan 2022 14:18:19 GMT by HMRC Admin 20
Hi Yury,

On disposal of an interest in a non-reporting fund, UK reident will be subject to tax on any gains arising as if those gains were income - that is, on the ‘offshore income gain’

IFM12300 - Offshore Funds: introduction: non-reporting funds

You can use the monthly exchange rates or the annual for the year, it is your choice. Guidance on allowable capital gains deductions can be fond here:

CG15150P - Capital Gains manual: introduction and computation: computation: expenditure: contents

If there is a loss then you would still declare this.

Thank you. 
Posted Sat, 22 Jan 2022 22:28:51 GMT by Iurii
Hello, Thanks for your reply. I briefly read the links and still have several things to clarify. Could you please kindly clarify two points: 1. Expenditures I didn't find relevant examples in the section about the disposal of shares. My broker charges me two kinds of fees: a) A fee on a buy/sell shares b) An everyday fee for holding the shares Could these fees be deducted from the gain as "incidental costs of acquisition and disposal"(https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg15250)? 2. How to calculate the tax in case if I calculated the gain in the right way in the previous point. I am a basic rate taxpayer in this tax year. Am I right that if a sum of my salary in this tax year and the gain is below 50k, then the gain will be taxed at a 20% rate? Thanks.
Posted Mon, 24 Jan 2022 14:03:14 GMT by HMRC Admin 17

Hi,
 
a) You can claim incidental costs associated with the sale of the shares, i.e. the fee to buy and sell.

The fee to hold the shares would not be connected to the buy/sale and would therefore not be allowable.

b) yes you are correct.

Thank you.
Posted Mon, 24 Jan 2022 19:52:02 GMT by Iurii
Great news. Many thanks!
Posted Mon, 24 Oct 2022 21:24:22 GMT by Iurii
Hello, I've realised I have several more things to clarify. I didn't mention that the fund is non-reporting and non-distributing: no dividends, just an accumulation of a gain inside the fund. 1. Should a gain be calculated as "sell shares price in GBP" - "buy shares price in GBP" - "fees on buy/sell in GBP"? 2. I am thinking about gifting the shares to my wife. Am I correct that this gift will be tax-free? 3. If my wife chooses to sell them: a. Will a gain be subjected to income tax depending on her tax band, not mine? b. Should a gain be calculated as "shares price in GBP, when my wife will sell them" - "shares price in GBP, when I bought them" - "fees in GBP which my wife will pay on sell" - "fees in GBP which I payed on buy ". Thank you.
Posted Fri, 28 Oct 2022 06:47:56 GMT by
Hi Yury,

1 - Price shares were sold for minus the expense of selling.  
     Subtract from this the purchase cost plus the expenses incurred in buying the shares, leaving a chargeable gain.  
     There is also the annual exempt allowance for capital gains of £12300.00.

2 - There is no tax implications to the transfer of assets between husband and wife between civil partners.

3 - There is the potential for there to be a gain arising from the sale of the shares.  The acquisition costs would be used to work out if there is a gain.

Thank you. 




 
Posted Fri, 28 Oct 2022 08:34:18 GMT by Iurii
Thank you. > There is also the annual exempt allowance for capital gains of £12300.00. In this case a gain seems to be taxable as income, so no capital gains allowance or rates are applicable here. Is it correct? >There is the potential for there to be a gain arising from the sale of the shares. The acquisition costs would be used to work out if there is a gain I am still unsure about the following things in this case: 1. If my wife sells gifted shares, could she use acquisition costs(initial shares price in GBP + fees in GBP, which I paid, not my wife) to calculate a gain? 2. As I mentioned above, a gain seems to be taxable as income(I and my wife have different tax bands). Will only her tax band be considered(not mine) to calculate taxes if she sells gifted shares? PS Sorry for the myriad of questions: I am a newbie to the UK tax system.
Posted Tue, 01 Nov 2022 19:29:16 GMT by Iurii
Hello, Could you advise on questions above please?
Posted Wed, 02 Nov 2022 10:06:11 GMT by
Hi Yury,

Whether or not sums received for the disposal of an asset are chargesable as income, is sometimes not an easy answer and will depend on the nature of the asset and the context of its disposal.

 An example would be a property developer, buying properties, doing them up and selling them afterwards.  

The property developer is buying and selling assests as a business, so income tax would preceed capital gains tax.

Thank you. 





 
Posted Wed, 02 Nov 2022 10:21:18 GMT by Iurii
Hello, Thank you for the reply. >Hello, I invested USD two years ago in a mutual non-reporting fund incorporated in Grand Caiman. At that moment, I was a tax resident >of another country. Now I am a UK tax resident, so I am trying to figure out the tax consequences of a disposal of shares of this fund. Sorry for the confusion, I mentioned in the beginning of the this thread that the assets are shares of non-reporting non-distributed mutual fund, nominated in USD. All my questions are related to these assets.
Posted Fri, 04 Nov 2022 14:46:27 GMT by HMRC Admin 10
Hi Yury
On disposal of an interest in a non-reporting fund, UK reidents will be subject to tax on any gains arising as if those gains were income - that is, on the ‘offshore income gain’.
 Please see IFM12300 - Offshore Funds: introduction: non-reporting funds.
You can use the monthly exchange rates or the annual for the year, it is your choice.
Guidance on allowable capital gains deductions can be found here: CG15150P - Capital Gains manual: introduction and computation: computation: expenditure: contents.
If there is a loss then you would still declare this.
Thankyou.
Regards.

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