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Posted Fri, 20 Aug 2021 13:02:58 GMT by Paul Gibbons
I recently received a large payment from a Financial Services company in the US who handled the shares for a previous employer of mine. Unbeknown to me, a large number of shares had vested on my behalf and were sitting around waiting to be claimed (for over 10 years). Before I received the funds I had to complete a W-8BEN form (which I used to do annually when I worked at that company) in order for the tax to be applied in the US prior to it being sent to me. What I'd like to know is, how do I go about declaring these funds when I fill out my self-assessment and tax returns form? Is it foreign income? Is it Capital Gains? Is it both? Can I apply for 'Foreign Tax Credit Relief on Capital Gains' (whatever that is)? Any advice would be greatly appreciated! Thanks!
Posted Fri, 20 Aug 2021 15:12:48 GMT by HMRC Admin 20
Hi Paul Gibbons,

You will need to check your paperwork to see if these shares are subject to capital gains tax or income tax. This will then determine where they need to be entered on the return.

If they are Capital gains tax you would complete the capital gains section and then only complete the foreign section if tax has already been deducted at source so that  foreign tax credit relief can be given.

If they are subject to income tax then this will be noted as other income. 

Thank you.

Posted Fri, 20 Aug 2021 15:26:37 GMT by Paul Gibbons
Hi, thanks for the fast reply. I have no paperwork, I haven't worked for that company for 14 years. When I was an employee the shares themselves were handled entirely by the financial service company in the US, and when I received funds from them in the past all the taxation was already taken off as part of the W-8BEN process. I was never required to pay any capital gains tax, or any other tax on them in the UK. So would the situation still be the same today? The difference with these funds is that they're not directly from vesting stocks, as the stocks vested years ago. I don't know if that makes any difference when it comes to tax. I just want to make sure I declare the funds properly so I don't get slapped on the wrist later! :-)
Posted Sun, 22 Aug 2021 21:19:12 GMT by HMRC Admin 18

You would only need to pay capital gains tax when the shares were sold. If this is only the case now then it is likely that they will be subject to capital gains tax. If the U.S. are charging the U.S. equivalent then it will be reported for Capital gains. Please see guidance here in case this is classed as an insurance policy:

Gains on foreign life insurance policies (Self Assessment helpsheet HS321)

Thank you.

Posted Wed, 25 Aug 2021 15:28:06 GMT by Paul Gibbons
Thanks, that's much more helpful. I'm not sure how the foreign life insurance helpsheet relates to my query, though. So should I declare it as foreign income? And since I was taxed in the US can I apply for 'Foreign Tax Credit Relief on Capital Gains'?
Posted Thu, 26 Aug 2021 13:03:59 GMT by HMRC Admin 8
The helpsheet was in case it was a chargeable event gain from a life insurance policy and not a capital gain.
You would report any capital gain on the capital gains section of the return.
However, if tax has been deducted from this in the US then you would also complete the foreign section to let us know how much so we can give you foreign tax credit relief.

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