I am a holder of BN(O) visa who has recently started residing in the U.K. on the BN(O) to British Citizenship route. I have several questions concerning investment incomes that are paid into banks in Hong Kong.
(1) Proceeds from Stock Tradings that Constitute Positive Gains
In buying and selling stocks through Hong Kong banks, the banks would charge a number of fees including brokerage commission, stamp duty collected by the Hong Kong Special Administrative Government, tax levy collected by the Securities and Futures Commission of Hong Kong, a Financial Reporting Council Transaction Levy Fee, and a Trading Fee collected by the Stock Exchange of Hong Kong. Altogether, these fee may add around 0.34% to the cost of a trade.
In reporting the gains from stock tradings, should these fees associated with bought costs and sold prices be (a) included as part of the gains or (b) left out?
For example, if a stock was bought as one lot of 1000 shares at HK$ 9 per share with a total cost of HK$ 9,000 + HK$ 30.6 (fees) = HK$ 9,030.6, and sold at HK$ 10.2 per share with the proceeds being HK$ 10,200 – HK$ 34.68 (fees) = HK$ 10165.32, should the gain be:
(a) HK$ 10,165.32 – HK$ 9,030.6 = HK$ 1,134.72
HK$ 1,134.72 + HK$ 34.68 + HK$ 30.6 = HK$ 1,200; or
(b) HK$ 10,165.32 – HK$ 9,030.6 = HK$ 1,134.72
For the situation in (a), would selling a share at a loss in terms of share price (e.g. bought at HK$ 9.34 per share and sold at HK$ 9.32) be considered reportable for self-assessment if after adding back the fees to the loss results in a small gain? Or a loss in terms of share prices is not reportable? It is noted that the price graduation of a stock in Hong Kong is at least 0.1% of the share price.
(2) Proceeds from Selling of Mutual Fund Shares that Constitute Positive Gains
In purchase of Mutual Fund shares, a charge is added to the purchase amount which is typically between 1% to 5%. If a sale is a loss in terms of NAV e.g. bought at US$ 14.15 NAV and sold at US$13.78, would that be sufficient to consider the sale a loss and therefore no need to report the case for self-assessment?
(3) Stock Dividends
For stock dividends, should the dividend collection fees charged by banks which are deducted from the amounts deposited to account be added to the dividends as part of the gains?
(4) Bond Distributions
Should distributions from Government Bond (e.g. issued by the Hong Kong SAR Government) be reported as interest for tax assessment purpose?
(5) Interest on Savings
Is interest on savings regardless of currencies reportable for tax assessment purpose?
For annuity plan that has matured, are the monthly payments reportable for self-assessment purpose? Also, if the annuity plan is surrendered for a single payout, would that be taxable as well? and if so, how should the capital appreciation be calculated?
(7) Exchange Rates
The reportable items in (1) to (6) above may be in different currencies and distributed at different dates throughout a year. Would it be acceptable to use the HMRC monthly exchange rates of the distribution month for conversion into GB Pound?
Thank you for your attention to these questions.