enquirer_2023June_HMRC

Dear Sir/Madam, I am a first-time tax payer who will start paying tax part-way in the tax year of 2022-23. Among other investment incomes, I hold two accumulation mutual funds that reinvest dividends as shares and I would like to know how to report the investment incomes from them. Do I report: (a) only the dividends that were re-invested after the day I become tax resident, and the capital gain (with the already-taxed dividends deducted) when I redeem the fund? (b) just the capital gain which will include the dividend reinvestments as and when I redeem the fund? Thank you.

Hi Thank you for your reply. I am presently tax resident and domicile in the UK. I have two further questions: Q1: if my BN(O) visa was issued on 15th July 2022 and I entered the country on 17th August 2022, then, regarding the tax year of 2022/23 which starts in April 2022, do I declare my investment incomes from the start of the tax year (April 2022), the start date of my BN(O) visa (15th July 2022), or the day I entered the country (17th August 2022)? Q2: for investment incomes in currencies other than GB Pound which are distributed on different dates within a year, to convert these incomes to GB Pound, would it be acceptable to use the HMRC average exchange rates for the months in question, or must the exchage rates be those of the distribution dates? If only the latter is acceptable, where may I find the official exchange rates for the dates concerned? Thank you again for your attention.

Dear Sir/Madam, 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? (6) Annuity 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.