Income from foreign NRE account

Hi,

NRE account interest that is taxable in the UK, can receive a credit not exceeding 15%, for Indidan tax, even if no tax has been paid. The credit relief is calculated using the tax spared mechanism, which deems Indian tax to have been paid at the marginal rates applicable there. You can see guidance here: 

DT9553 - India: Notes

Thank you.

Hi, I require clarification on a few queries which i am very confused about. I have only been recently made aware that I have to report my foreign income in India. I am UK resident holding an NRE account in India for the last 30 years. My NRE account has not received any income but i have got Fixed Term deposits and Mutual funds. The interest gained from the FT deposits has not been taxed in india. So how do i calculate this when reporting to HMRC? The FT deposits is joint with my daughter. Also same with the mutual funds but without my daughter and solely in my name. On a slightly separate note, I also have property in india which i have inherited 5 years ago. Is this reportable foreign income with HMRC? If so how do i do this? Bearing in mind there has been no income received from this property since inception.

Hi jg77,

Any interest in joint accounts will be split 50/50 and the sole account will be 100%. As no income has been received from the property, you do not need to declare this.

You can find further guidance is at:

Tax on foreign income

Thank you.

Hi Hmrc admin 32, One clarification on above response on interest spilt of 50/50, This was for me and my wife holding a joint account and interest spilt will be 1/99 I have spoken to Hmrc personal tax team and they have mentioned that you can spilt the interest in any other spilt by submitting your respective self assessment and putting your interest allocation in your respective SA and there is not need to notify Hmrc on the spilt. Is that correct ? Thank you .

Hi Team . I have just received a tax letter about knowing my details of saving in India . I have not visited India since 2020 and then covid and visa suspension. My bank account has been frozen since there has been no activity for several years .We have a large amount of saving in Fixed bonds which we opened many years ago . Do we pay tax on money when we repatriate back to Uk in the near future .

Hi connectiondue,

No. you need to notify HMRC of the alternative split and have it approved. You can see guidance here:

Declare beneficial interests in joint property and income

Thank you.

Dear Hmrc admin 19 , Thank you for your reply The above link you provide the form says below - which is only to spilt income for a property. When to fill in this form You can use this form to declare a beneficial interest if you hold property jointly and: As I mentioned previously, For savings interest spilt in joint account, I was told over the phone they you just need to update your respective spilt in your respective SA and there is no need to notify HMRC. Can you confirm the same ? For savings income in joint account (not a property) Thank you

Hi suresh Patel,

Interest etc is charged on the arising basis. If you are resident and domiciled or deemed domiciled in the UK, when the interest arises, then this interest is taxable in the UK in the year it arises, whether you remit the interest to the UK or not.  

If you are resident, but not domiciled in the UK at in the year the interest arises, and you do not remit the interest to the UK, then it is not taxable. It will, however, be taxable in the year in which you do remit the interest to the UK.

For more information, you should review the guidance on resident, domicile and remittance, which can be found at:

Residence, domicile and the remittance basis: RDR1

Thank you.
 

Hi,

The guidance at SAIM2420 advises that "interest arising on an account held in joint names of spouses or civil partners, each will normally be taxable on half of the interest, under ITA07/S836. Where, however, their beneficial entitlement to interest (or any other income from a jointly owned asset) is not actually 50:50, they may elect to be taxed on their actual entitlement". 

SAIM2420 - Interest: taxation of interest: joint accounts 

You would need to write to HMRC, to make an election to change from 50:50 to an unequal benefitial share of the interest.

Thank you.
 

Dear Hmrc admin 32, Thank you and this is great, can you tell me which form or just a normal letter do I need to write to Hmrc. ? Also what details do I need to put into the letter and where do I need to post this letter to please ? Thanks again for the clarification

Hi HMRC admin, From your statement “If you are resident, but not domiciled in the UK at in the year the interest arises, and you do not remit the interest to the UK, then it is not taxable. It will, however, be taxable in the year in which you do remit the interest to the UK”, can you please clarify what to do in the following case: - I am resident in the UK and not domiciled - I have received interest X£ in my NRE account in Índia in each of the last 5 years from 2018 -2022 - I did not transfer any money from my NRE in Índia to UK in the years 2018 to 2020. - the first time I transferred part of my savings money from my NRE account in Índia to my UK account was on March-2021 which was to buy house in UK How do I now calculate the tax I owe if I transferred only a part of my capital and interest in FY 2020-2021? Do I pay tax on entire interest received in my NRE account for year 2020-21? And from your statement if I understand properly I don’t pay tax on savings interest for the years 2018-19 and 2019-2020 because I didn’t transfer any money from my NRE account to UK, correct?

Hi connectiondue,

Your correspondence address is:

'HM Revenue and Customs BX9 1AS'.  

All letters should show your current address, your National Insurance number and / or your Self Assessment number (UTR).

Thank you. 

Fixed rate bonds held in bank in India .How can you pay tax on your investments if the money hasn’t yet been remitted to uk .Plus due to covid visas to India have been suspended! Only just reinstated dec 6 2022 .Bank have suspended accounts due to no activity and only reinstated them if you go with the right documentation.So one wouldn’t really know how much interest they are making if the bank don’t reply to you emails .

Hi,

You are only liable to UK tax on any amounts of foreign income and gains that you remit to the UK. You can see more information here:

Remittance basis 2022 (HS264)

Thank you.

 

Hi suresh Patel,

This depends on whether you are UK tax resident or not (or non domicile).

Please see guidnace at:

Tax on foreign income

Paying tax on the remittance basis (Self Assessment helpsheet HS264)

Thank you.

Urgent advice needed .How do I fill in the worldwide disclosure form online when the bank in India has froze the accounts since 2021 because it had been dormant since covid 2020 . I have emailed various documents Jan 2022 and also October 2022 but I have no response from them I only have less than 90 days to submit this form .

Hi,

We would suggest contacting the bank in India, to see if they can give you details of any interest etc for the disclosure.

If your records are not complete, estimate as accurately as you can any income or expenses that you do not hold a record of. Keep copies of your calculations as we may ask to see how you have worked these out.  

If you are getting close to the 90 day limit, you could write to HMRC seeking an extension. 

Make a disclosure using the Worldwide Disclosure Facility

Thank you.

I am a UK citizen paying 40% tax on my income. I transferred x GBP to an NRE account and invested in FD in INR. I earned interest, but the value of my balance including the interest dropped to lower than what I had when I initially transferred the money. This was due to the currency rate going up. So my current balance+ interest earned is less than x GBP now. Do I still pay tax on the interest earned in the UK? Regarding 15% credit, am I eligible for 15% credit relief in my tax assuming it is to be paid? Does it mean that if the total tax comes to y GBP due to the interest earned, I pay y-15% tax? Thank you.

I am a British citizen paying 40% tax on my income. I have an NRO account wherein I have my savings from my income in India prior to migrating to the UK. I have invested this money in Indian banks (FDs) and mutual funds. I earn interest and dividends. The Indian Government deducts tax at source. I also file income tax returns in India. Do I need to declare this income or pay tax in the UK as well?

I have one last query. I am filing self-assessment corrections from 2016 since I did not know that interest earned in NRE + NRO account need to be declared as income in the UK. NRO and NRE accounts maintain the amount in INR, not GBP. If I had earned say 1000 INR in 2016 as interest, do I now convert it into GBP through INR to GBP conversion rate available online for 2016 or 2023? Which website should I use for currency conversion? I assume that if the tax due per the calculation is less than 15% of the foreign tax paid, I won't need to pay additional tax on this interest anyway.