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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I am currently investing in New Zealand. I am investing

Resolved Question:

Hi I am currently investing in New Zealand. I am investing my UK money into NZ$ dollars and at the moment is proving very successful. What are the tax implications in the UK as I believe I will have to pay any taxes due to NZ government first as we have some sort of agreement? Does this come under capital gains tax or income tax?
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

Currency gains are chargeable to capital gains tax and not income tax.

Where a foreign currency bank account includes sums acquired otherwise than for the personal expenditure outside the UK of the holder or his family, those sums constitute debts which are chargeable assets.

If you were to suffer any tax on this gain in NZ then you claim foreign tax credit relief.

You report the gain and tax credit by completing supplementary pages SA106 - Foreign when filing the tax return.


The article here is helpful in understanding currency gains and tax implications

http://www.step.org/currency-gain-or-currency-pain



I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.

Thanks for speedy reply

Just to clarify I am investing from a UK bank account, this money is then invested in NZ and when it makes a profit, I can request part or all of the profit which is then transferred back into my UK account.

My question is if I am liable to capital gains tax in NZ then I wont be liable to any tax in the UK but would still have to complete a tax return showing the tax paid in NZ

Many thanks

Expert:  taxadvisor.uk replied 2 years ago.
Brian, thank you for your reply.

When you are UK resident you are normally taxed on the arising basis of taxation. This means that all your worldwide income and gains will be taxable in the UK. Therefore, even if your foreign gains have already been taxed in another country they will still be taxable in the UK and you must declare all of your foreign gains on your tax return by completing supplementary pages SA106 - Foreign.


You would claim Foreign tax credit relief for any tax suffered on that gain abroad.

I hope this is helpful.


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Customer: replied 2 years ago.

Thanks

If the CGT in NZ is 28%, would I still be due to pay any UK tax as I believe UK top rate is 28%

Expert:  taxadvisor.uk replied 2 years ago.
Thank you for your reply.

The maximum tax you would pay on the gain in the UK is CGT at 28% after allowing for gains allowance. If the tax paid in NZ is 28% then there would be no more tax payable in the UK.

I hope this is helpful.
Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.

Best wishes.

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