Location of Assets in Interactive Brokers UK

Dear Sirs, Below is a statement made by Interactive Brokers: “Residents of the UK, EU countries and other select countries (i.e., Switzerland) may only open an account with Interactive Brokers (UK) Limited, irrespective of where you are domiciled. For your reference, UK Limited acts as an arranger for Interactive Brokers LLC. Interactive Brokers LLC holds clients funds and assets." If in my Interactive Brokers UK account there are cash (e.g. USD, GBP) and securities (e.g. US treasury bonds, US corporate bonds, US stocks, UK stocks) which Interactive Brokers said are held by Interactive Brokers LLC (in US, not in UK), what would be the view of HMRC regarding the locations of those assets in my Interactive Brokers UK account, UK or US? For dividends and coupons/interests generated by those assets in my Interactive Brokers UK account, will they be regarded simply as UK incomes? US incomes that are remitted to UK from US? Or they will still be regarded as offshore (US) incomes? Thank you very much for your attention.

Hi,

It depends on the currency in which things are paid.

If not paid in sterling, it is foreign income.

Thank you.

I don’t think the answer from HMRC Admin 2 Response really answers the question – it refers to the source of income rather than the location of assets. I also think the answer as stated is incorrect; it is the source of the income that determines whether income is UK income or foreign income. The currency it is paid in is irrelevant – of course most foreign income will be paid in foreign currencies rather than sterling, but that does not necessarily mean all income paid in foreign currencies is foreign income. A UK resident company can pay dividends in $US and it will still be UK source income. Similarly there are many situations where income is paid in GBP by foreign funds or companies (eg Jersey and Guernsey resident entities) where the income would be regarded as having a foreign source. The question is about the location of funds, presumably where someone has claimed the remittance basis of taxation on such funds and needs to avoid bringing it to the UK. Any funds brought to the UK will be regarded as a remittance for UK tax purposes. If Interactive Brokers UK only acts as an arranger, and all cash and securities are actually held overseas by the US LLC, then there would be no remittance. The key thing is to confirm with the broker that at no time are the funds or assets held in the UK. Note that the purchase of a UK share or security will be regarded as a remittance, even if it is purchased overseas and the asset is held overseas. By way of footnote, there is a specific exemption for bank transfers between foreign centres that pass through the UK banking system which is covered in HMRC manuals at RDRM 33560, but that is unlikely to be relevant here. Thanks Gavin