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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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, if i bring in my savings from india to uk to buy property

Resolved Question:

hi,
if i bring in my savings from india to uk to buy property , will it be taxed? the money i am bringing in is already taxed in india
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi.

Can you tell me if you live in the UK and, if so, how long you have done so please. I may need to ask more questions. Whether I do or not will depend on your response to my first sentence.
Customer: replied 1 year ago.

i live in the uk, i am here on a tier2 visa, and i have been here for 9 months so far. so, in essence, i am non-domicile as i was born in india.

the key thing i am looking for is to transfer some of my savings that i have in india to uk to buy a property

i can do that myself or, i can ask my parents/father in law to transfer the money to my uk bank account.

the amount is around 50-55000 pounds.

Expert:  TonyTax replied 1 year ago.
Thanks.

Leave this with me while I draft my answer. It will take a while.
Customer: replied 1 year ago.

i didnt understand : are you saying that it is not a straight forward yes/not?

as i understand it, there is DTAA with india right?

i can show documentation that the money is all after tax...

so, i should be able to claim relief right?

secondly, if i route through my parents/father in law, it then become a gift? would that attract tax?

essentially what i am looking for is to avoid tax altogather as it has been taxed already.

Expert:  TonyTax replied 1 year ago.
No, it's not straightforward. Do you want me to give you the answer I would give to people in a similar situation to you, ie the right one that you can refer to in future, or a simple yes or no which you might get from somebody who doesn't care about providing a service?
Customer: replied 1 year ago.

i need the right and detailed answer that i can refer to in the future

Expert:  TonyTax replied 1 year ago.

Thanks.

You should read RDR1 here, in particular Section 9 on the remittance basis of assessment.

If an individual is resident and domiciled in the UK, they are taxable on their worldwide income. As you are not UK domiciled, you can choose pay to UK tax on your worldwide income as a UK resident and domiciled individual would or to not pay UK tax on your non-UK source income that you don't remit to the UK by using the remittance basis of assessment.

If you choose the remittance basis, any non-UK income or gains which arose after your arrival in the UK and that you bring into the UK will be taxable in the UK but you will get credit for tax paid on the same income and gains in India under the terms of the tax treaty between the UK and India against your UK tax liability.

You should separate the non-UK cash and assets you held immediately before you came to live in the UK from that acquired since and keep detailed records. The rules of identification are complex. Any money that you bring into the UK that you held before you came to live in the UK will not be taxable in the UK.

The recipients of gifts do not pay tax on them in the UK, except in rare situations. If you were the recipient of a gift from a non-UK source, that would be beyond the reach of UK tax. Giving money to a relative to then send to you in the UK would not be a gift and would not necessarily avoid UK tax.

I hope this helps but let me know if you have any further questions.

Customer: replied 1 year ago.

hi tonytax,

i am not sure this answer is correct.

i checked on the the web , and i see that if the money was saved/acquired before i became resident in the uk, then i dont need to pay any tax even if i bring it in. can you confirm?. secondly, if i have some money that i got ( in indian rupees) after i became resident in uk, and if that money was deferred compensation ( essentially wages, but got paid later ) do i need to pay uk tax on it?

Expert:  TonyTax replied 1 year ago.

My answer is correct. I've been in tax for 35 years so it's become second nature to deal with such questions .

I'm not sure where what I said about money held before you came to the UK is any different to your understanding in that regard. This is what I said in my answer:

"Any money that you bring into the UK that you held before you came to live in the UK will not be taxable in the UK."

Your deferred wages will not be taxable in the UK so long as they were earned before you became resident in the UK.

Customer: replied 1 year ago.

hi tony,

thanks, ***** ***** one more clarification question on the deferred wages :

there are two types of deferred wages/benefit money that i got :

1. gratuity - this is a indian government mandated benefit that an employer gives on termination of employment . essentially a month's pay per year of service is given.

2. provident fund : this is a pension type scheme where each month a portion of the salary is cut and employer puts in a matching contribution . on termination of employment, the employee can withdraw this money .

i got both gratuity and provident fund money from my previous employment after i become resident in the uk.

so given this additional information, can you confirm that i still do not need to pay tax in the uk for these two ?

Expert:  TonyTax replied 1 year ago.

The payments relate to the termination of your employment in India and so long as you became UK resident after that date, the income won't be taxed in the UK if and when you remit it to the UK.

Customer: replied 1 year ago.

you mention : The payments relate to the termination of your employment in India and so long as you became UK resident after that date -- what is the date that you are referring to ? the date of termination of my employment in india? note that the money came into my account after i became resident in the uk.

Expert:  TonyTax replied 1 year ago.
The date I'm referring to is the date that your job in India ceased. By definition, you can have no earnings from that job after that date that don't relate to your doing that job in India before you became resident in the UK.
Customer: replied 1 year ago.

i am confused : let's rewind a bit : both gratuity and provident fund money that i got , is for the job that i was doing in india . but i got the money in my account after i came to the uk ( ie it arose after i became resident in the uk ) . so, can you confirm that i dont need to pay any tax in the UK for this money.

Expert:  TonyTax replied 1 year ago.
Yes I can confirm that you won't pay tax on the gratuity and provident money if you bring it to the UK. The income was earned before you came to the UK and should be treated in the same way as other money you earned before you became UK resident, ie not taxable in the UK if you bring it into the UK.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15841
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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