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Sam
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Category: Tax
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I emmigrate from Hong Kong since 8 Aug 2014, but I have first

Resolved Question:

I emmigrate from Hong Kong since 8 Aug 2014, but I have first come to UK with my UK passport on mid Jan 2014 for two weeks; and came again for one week in May 2014. I have tranferred part of my money into the UK bank in June 2014 preparing for buying car and house. I been warned by friends that UK government may charge me tax for the money bringing (or transferring) into UK. Now I have already booked a car and reserved a house, all are to be paid in whole (i.e. not by mortgage). Can you tell me the taxation rule on this issue.
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi
Thanks for your question
I am Sam and I am one of the UK tax experts here on Just Answer.
Can you advise where this money came from that allowed you to plan for your move from the UK.
Was it from a property sale in Hong Long for example, or from savings - if a property sale, had this been your main residence throughout ownership.
Please advise further
Thanks
Sam
Customer: replied 2 years ago.

Hi Sam,

Before I emmigrate to UK, I have worked in a big firm for 40 years+. The company exercised a provident fund system for retirement, in which employee contributed 5% of his salary each month and the company correspondingly contributed 12.5% in his p-fund account. The fund was managed by a trustee company. Employee could have freedom to invest on certain kind of funds or put it on fixed deposit, but did not allow to take it until leaving the company. Apart from my own minor saving, my main source of money will be coming from selling the fund, convert it into British Pound and tranfer to UK.

Kind Regards

Dennis

Expert:  Sam replied 2 years ago.
Hi Dennis
Thanks for your response
If this relates to the fund you sold, and this transfer took place before you came to reside in the UK then it will NOT be liable to UK tax, as you are treated as not resident (and therefore not liable to UK tax) until such time until you do become resident - which will be from 8 August 2014
This is assuming that you have been not resident in the UK for many years.
Had this transfer taken place after 8 August 2014, then it would have to be considered for UK tax, so note that any further transfers on money into the UK will be considered for UK tax.
Thanks
Sam
Customer: replied 2 years ago.

Hi Sam,

I'm living in a hotel right now and going to hire a flat starting on 28 Aug 2014. I have not registered to local Council yet. I have reserved a house and a car. The house needs to be paid with 10% deposit in this month and the balance is to be paid when completed which will be in March next year, the car will be paid by the beginning of next month. All such money, also my cost of living have not been transferred to UK yet. Is there any tax free grace period for immigrant to move his money to UK or any alternative can be advised on this issue?

Kind Regards

Dennis

Expert:  Sam replied 2 years ago.
Hi Dennis
Thanks for your response
Then yes, this transfer of money could be liable to UK tax, and I am afraid no, there is no period of grace for new arrivals in the UK.
However might I ask, what did you transfer to the UK in June 2014?
Have all the funds that remain in Hong Kong, still sit within the fund system or have these all been released before 8 August 2014 (so sit in a bank)
If they are sat in a bank are they earning interest ?
Thanks
Sam
Customer: replied 2 years ago.

Hi Sam,

I transferred only £70,000 to UK bank before 8 Aug with my own saving. The retirement provident fund is still with the trustee company in Hong Kong, which I propose to draw it out, convert to GBP and transfer to UK bank in Nov this year.

I still have saving in the bank in Hong Kong but the interest is very very low, less than 100 Hong Kong Dollars a year, which is equivalent to less than £10 a year.

Kind Regards

Dennis

Expert:  Sam replied 2 years ago.
Hi Dennis
Thanks for your response
Then the £70,000 that you transferred before 8 August will have no tax consideration.
The small amount of interest you earn will have, or any interest earned since 8 August
But the pension fund will have a UK tax consideration, as its still remains in the fund.
With UK pension funds, if you are over age 55, then the first 25% of the whole value of the fund is tax free, and any amount over this, is liable to income tax.
If you are under age 55 - then the whole amount taken out of the fund will be subject to UK tax (whether you bring this into the UK or not, as you have a UK passport so will be taxed under the arising basis, which means all income that arises, is subject to UK tax, wherever in the world it arises from, and whether its brought into the UK or not)
You must alert the UK tax office when this pension fund is released for them to provide you with a tax return to complete (which is issued after 05/04/2015) to establish what tax is due (along with any other income you have earned)
But with UK income
The first £10,000 is tax free
The next £31865 at 20%
Between £31865 and £149,999 at 40%
Anything over £150,000 at 45%
Link here to contact HMRC
http://search2.hmrc.gov.uk/kb5/hmrc/contactus/view.page?record=hpkspulskxM
Please also note that if your annual income is in excess of £100,000 then for every £2 its over this limit, this reduces your personal allowances by £1 (so if you annual income was £120,000 you will not have the first £10,000 tax free)
let me know if you have any follow up questions - but it would be appreciated if you would rate the level of service I have provided.
Thanks
Sam
Sam and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Hi Sam,

I don't quite understand why 8 Aug is used as the time line to demarcate the money transfer before or after. Why not the date when I first used my UK passport in mid Jan coming into UK, or the second time in mid May.

I have not registered to local Council yet, and I have not been set up with taxation file, how can the goverment tell whether I am staying in UK.

The money I have was not earning in UK. It is my pension received when I worked Hong Kong. Also the house I'm going to buy is the my first property in UK. It doesn't make sense to pay tax on top of the stamp duty.

I am not going to work in UK as I have already retired, but I need to pay the school fee for my son, which will be around £20,000 a year apart from the cost of living, so is there any tax free allowance for my son's school fee?

If I come into UK as visitor (i.e. not using UK passport) can I bringing money into UK to buy property?

By ticking the rating, does it mean that the service I paid for is over ?

Kind Regards

Dennis

Expert:  Sam replied 2 years ago.
Hi Dennis

Thanks for your response and apologies for the delay in responding, for some reason your response did not appear on the question list until now.

the 8th August is the relevant date from when HMRC will treat you are becoming a resident in the UK - your time in Jan and mid May were merely visits (from what you advise) and taxation and its affects on you are all relevant from the time that you clearly had an intent to reside in the UK rather than just visit.

I appreciate its not income, but you are downdrawing from a pension pot, and UK legislation states that unless you are over 55 (which you may well be) that only 25% of the pension pot can be taken tax free - any more than this holds a liability to tax. As you became resident in the UK from 8th August and are yet to undertake this, then you will fall into the UK tax jurisdiction on this money.

The fact you will not work here has no bearing (aside from the tax free personal allowances which allow the first £10,000 of income to be treated as tax free and then the full benefit of the tax rates )

You cannot be treated as a visitor as
1) You do hold a UK passport and
2) You will remit this money to the UK
3) You plan to buy property and live here

I am afraid there are no allowances for school fees - and what you use this money for does not allow any further tax reliefs to be considered. Only if you are over 55 and only draw out 25% of the pension pot, will that element remain tax free.
It might be viable to consider whether a transfer of these funds to a UK based annuity is the answer, but you would need to seek financial advise on that matter - to ensure that the investment or annuity provide sufficient income for your needs on a year by year basis.

I appreciate this is not good news, but I can only advise what the law is - not comment on whether I agree with it not it makes sense.

And yes you have rated the question which means you have paid for the time - and if you have relevant follow up questions, to your initial enquiry - this is covered by the amount you have already paid, If its a new topic, then you will either be required to list this as a new question or offer bonus amount on this original posting.
If you wish to post a further question, and would like me to assist with this, then please do advise that you wish "Sam Tax" to respond, That way the other experts will know to leave the question for me to answer.

Thanks

Sam






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