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TonyTax
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, I am originally from India and have been living and

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Hi,
I am originally from India and have been living and working in the UK for last 8 years. During this time, I have remitted savings from salary income received by my wife and myself back to India and kept in interest bearing fixed deposits. Tax has been deducted at source on them India and I include them in my tax returns filed in India. However, I never included them in my tax return in UK.
I have acquired British citizenship in Dec 2013 and now want bring these savings back to UK to pay as deposit for a house. Here are my questions:
a) Will I have to pay any tax when I bring this money back? If yes, at what rate?
b) Will both the capital and interest be taxed in UK (am hoping not as I originally paid tax on it as part of my salary income)
c) Is there any exemption limit?
d) I do not remember if I selected remittance or arise basis when I originally arrived. How can I check this?
e) Does the fact that I have recently taken citizenship last year (and now domiciled) make a difference? The income is from past 8 years
f) In case I have to pay tax, what is the procedure?
Thanks for your help.
Rgds
Piyush
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi.

Leave this with me while I draft my answer.

Expert:  TonyTax replied 1 year ago.
I'm back.

You should refer to RDR1 here and, in particular, the section on the remittance basis starting on page 53. This used to be available as a PDF document but it is now a Word document such is the wisdom of the civil servants who must think everyone has Word as opposed to free PDF software.

Unless your foreign income and gains were very small annually and you met certain other criteria in which case they you could ignore them for UK tax purposes. If there were more than £100 annually but less than £2,000 annually, you could choose to use the remittance basis of assessment without having to complete a tax return. See paragraphs 9.11 to 9.19 of RDR1.

If your unremitted non-UK income is £2,000 or more for a tax year, you can choose to disclose it and pay UK tax with relief being given for foreign tax paid on the same income as a UK domiciled individual would do or elect for the remittance basis to apply for the tax year and only pay UK tax on income and gains remitted to the UK from abroad in the tax year. To elect for the remittance basis to apply, you would put an "X" in the appropriate box in the SA109 pages, box 28 for the 2014/15 pages.

Where you choose the remittance basis of assessment and you have been resident in the UK for seven of the previous nine tax years, you will be liable for the Remittance Basis Charge. The charge gets higher the longer you live in the UK as a non-UK domiciled individual. See paragraph 9.29 onwards.

a When you remit foreign income to the UK, it will be added to your UK income and taxed at the appropriate rate depending on the type of income it is. Take a look here for information on the rates applicable to different types of income.

b Gains made since you arrived in the UK will be taxed as well as income if you remit them to the UK. Capital you held before you came to the UK will not be taxed in the UK if you bring it in. The difficulty you have is to identify what you are remitting to the UK and there are strict rules of identification.

c See the third paragraph above and the early paragraphs of the remittance basis of assessment section of RDR1.

d Look at your tax returns and see if you selected the appropriate box in the SA109 pages mentioned above. It is an annual election.

e The fact that you are now a UK citizen does not necessarily make you UK domiciled. The UK government probably wouldn't have a problem with you claiming that as that status will make your worldwide income taxable in the UK and bring your worldwide estate into Inheritance Tax when you die. See page 19 onwards of RDR1 for information on domicile.

f You disclose income and gains you remit to the UK in your tax return annually. If you want to bring all your cash and assets to the UK, you should find an accountant or tax adviser with experience in this field to guide you through the rules. They are complicated. Please read section 9 of RDR1 carefully. This version of the guide is effective from 6 April 2013. The main changes from the previous guide relate to the amount of the Remittance Basis Charge.

I hope this helps but let me know if you have any further questions.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15751
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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