In 2022, I had just arrived in the UK and chose the ARISING basis for that year. I remitted GBP 100,000 to the UK from overseas in 2022.
In 2023, I opted for the REMITTANCE basis and transferred this GBP 100,000 to Jersey, then earned GBP 6,000 interest in a Jersey bank this year.
If I do not remit the earned interest GBP 6,000 to the UK in 2023, would I need to pay taxes for it?
Dear HMRC Admin 25,
Thank you for your answer.
I apologize for my question was not clear enough. I read the information that you gave me but no appropriate answer was found there.
I sold the property for GBP 280,000, which consists of the price when I purchased the property of GBP 200,000, and a capital gain profit of GBP 80,000 when I sold it.
Purchased Price 200,000 + Profit 80,000 = Selling Price 280,000
The point is:
I divided the total amount of GBP 280,000 into three transfers: GBP 100,000, GBP 100,000, and GBP 80,000, from my bank account in Japan to my bank account in Singapore.
100,000 + 100,000 + 80,000 = GBP 280,000
Both my bank accounts in Japan and Singapore DO NOT contain any other funds, and NO GAIN was generated before or after the transfers. The total amount of funds remained at GBP 280,000 overseas.
By doing this, does the GBP 280,000 in my account in Singapore become a MIXED FUND?
In the previous fiscal year, I used the Remittance Basis and earned GBP 5000 in capital gains from overseas sources, which I did not remit to the UK.
In this fiscal year, I am using the Arising Basis and have a capital tax allowance of GBP 6000.
If I remit those GBP 5000 capital gains from overseas sources in the previous fiscal year to the UK this year, can I use the current year's capital tax allowance to cover it?
Please advise. Thank you.
I am using the remittance basis.
I sold a property in Japan that I had bought for GBP 200,000 ten years ago. This year, I sold the property for GBP 280,000, which consists of a cost of GBP 200,000 and a capital gain profit of GBP 80,000.
Due to daily transfer limits imposed by online banking, with a maximum transfer amount of GBP 100,000 per day, I divided the total amount of GBP 280,000 into three transfers: GBP 100,000, GBP 100,000, and GBP 80,000. These transfers were made over three days to a bank account in Singapore. One day one transfer.
Both my bank accounts in Japan and Singapore do not contain any other funds, and no gain was generated before or after the transfers. The total amount of funds remained GBP 280,000.
By doing this, does the GBP 280,000 become a Mixed Fund?
In this case, will I be able to separate the cost and profits in the future for tax purposes?
I select the remittance basis this year.
This year, I transfer funds (eg. GBP 20000) originally in the UK to an overseas bank and earn interest (eg 1000) overseas, do I need to pay UK tax on this interest earned overseas even if I do not transfer the interest into the UK?
Does it matter that the original capital was within the UK?
I planned to select the arising basis next year...
Do I need to pay tax on this fund (GBP 20000) if I transfer it back to the UK?
I am a non-domicile tax resident.
I used the 'Arising Basis' in my 1st year and 2nd year after immigrating to the UK.
In the 3rd year, I used the 'Remittance Basis', I got an overseas capital gain (£100,000), and I kept it in a separate overseas bank account, and not remitted it until the 9th year.
From the 4th year to the 9th year, I switched back to using the 'Arising basis'.
1. In the 4th to 9th year (using Arising basis), will I lose my Personal Tax Allowance every year due to still holding the unremitted overseas capital gain (£100,000) that was obtained in the third year?
2. In the 9th year, if I bring this overseas capital gain (£100,000) into the UK, will I have to pay Capital Gain tax for this £100,000? Will I need to pay any other fees or taxes for this action?
Before asking this question, I have already read this guidance. After following your suggestion, I have gone through it several times but couldn't find the answer to the problem. Could you please review the question once again and provide an answer?
I have a following question:
If I transfer my fund from Singapore to my bank account in Jersey (eg. HSBC), would it be a fund remitted into the UK?
To easier to understand the question, I make an example...
A tax resident and non-domiciled who has immigrated to the UK.
In the first year and second year, he chooses the arising basis.
In the third year, he chooses the remittance basis and sells his overseas property abroad, gaining a capital gain of £100,000. He keeps this amount in an overseas bank and earns an annual interest of £3,000.
From the fourth to the eighth year, he continues using the arising basis. The £100,000 funds held overseas continue to generate bank interest of £3,000 per year for five years, a total £15,000.
(all the interest be placed into a clean account other than the £100,000 Capital gain account)
1st Year : Arising Basis
2nd Year : Arising Basis
3rd Year : Remittance Basis. Gained £100,000 Capital gain, Earned £3,000 saving interest from this Capital Gain in the year.
4th - 8th Year : Arising Basis. Keep the Capital Gain of £100,000 in an overseas bank, and earned £3,000 in saving interest each year.
Q1. In the third year, he chooses the remittance basis:
Q1a. If he does not remit the entire capital gain of £100,000 and the earned interest of £3,000 to the UK, are they both exempt from tax?
Q1b. If he transfers the £3,000 interest to the UK, is he only required to pay tax on the interest that year?
Q2. From the fourth year to the seventh year, he switches back to the arising basis:
Q2a. Can he continue to keep the £100,000 held in the overseas bank CG tax-free?
Q2b. If he remits the annual bank interest of £3,000 to the UK, is he only required to pay tax on the interest without applying for the remittance basis?
Q2c. Since he is adopting the arising basis, can the remitted bank interest be eligible for the tax-free allowance for those years?
Q3. In the eighth year, he continues using the arising basis:
Q3a. Can he continue to keep the £100,000 funds in the overseas bank tax-free?
Q3b. If he transfers the entire or partial amount of the £100,000 to the UK, does he need to apply for the remittance basis and pay the remittance basis charge?
Q3c. If he transfers the entire or partial amount of the earned interest of 3,000 to the UK, does he need to apply for the remittance basis and pay the remittance basis charge?
Q3d. For the transfer amount of 100,000, will the HMRC levy capital gains tax based on the conditions of the capital gain, meaning it will be taxed in the category of the year the profit was obtained (the 3rd year)?
To make it easier to understand the question, I make an example:
Mr. A and Mrs. A became tax residents in 2021.
Mrs. A (wife) purchased an overseas (buy-to-let) residential property in 2019 for £300,000.
In 2020, Mrs. A sold the property to Mr. A (her husband), for £400,000. Mr.A kept it letting out.
In 2023, Mr. A sold the property for £500,000.
The buyer's solicitor made two payments: an initial deposit of 10% (£50,000) and the remaining 90% (£495,000). The total amount was £500,000.
The buyer’s solicitor deposited these two payments into Mr. A's overseas bank account, which is a clean account with no other funds and no added interest.
During the transaction (Mr. A sold the property to the buyer), assuming the cost of stamp duty and solicitor fees was £40,000.
Selling price: £500,000
Solicitor and Stamp duty: £40,000
Gain: £500,000 - £300,000 - £40,000 = £160,000
Due to the transaction system for overseas property sales, the buyer's solicitor does not separate the capital and profit when depositing funds into the seller's account. The buyer’s solicitor deposits the deposit (10%) and the balance (90%) into Mr.A’s account.
Q1. - Do both Mr. A and Mrs.A need to use the remittance basis? -
Since the property was initially purchased by Mrs. A in 2019 and then sold to Mr. A in 2020.
In 2023, Mr. A intends to use the remittance basis to keep the profit (£160,000) from the sale of this property offshore, making it exempt from CGT (Capital Gains Tax).
Does both Mr. A and Mrs. A need to use the remittance basis together for CGT exemption, or can it be solely Mr. A's decision without affecting Mrs. A?
Q2. - How to clearly inform HMRC about the breakdown? -
After the transaction, Mr. A received the full amount of £500,000 in his overseas bank account (with no interest and a zero balance). He plans to remit the capital and allowable expenses (£300,000 + £40,000) to the UK CGT tax-free, while keeping the profit (£160,000) offshore without tax.
Which form should Mr. A use to clearly inform HMRC about the breakdown of the selling price (£500,000) into capital, expenses, and profit?
Q3. - Proof of capital amount? -
Can Mr. A use the Completion Statement issued by the solicitor to Mrs. A in 2019, which shows the initial and mortgage amounts for the property, as proof of Mrs. A's capital amount (£300,000) at that time? Any else document is needed?
Q4. - Should Mr.A wait for HMRC's response? -
Should Mr. A wait for HMRC's response and approval before remitting the tax-free amount of £300,000 + £40,000 (capital + allowable expenses) to the UK, or can he remit the funds first and report to HMRC within the tax year?
Q5. - Time limit? -
Is there a time limit for the separation of capital and gain and reporting?
Q6. - Is it not a Mixed Fund? -
Would a bank account that does not generate interest, and only holds funds from a single property transaction, including the capital and the profit of the property, not be considered a Mixed Fund?