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Sam
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Category: Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I live and work in Jersey Jersey based company. Before

Resolved Question:

I live and work in Jersey for a Jersey based company. Before coming to work in Jersey I had a directorship in a UK based company with 25% shares and at the time of my divorce my ex. Wife was awarded 50% of the shares when converted to cash. I was paid £20,000 for the shares in May 2014. My ex has since found out and wants her share, but I thought that I had to pay Capital Gains Tax on the full amount (£20,000) in Jersey, and then split whatever is left. Would I be in trouble with the Tax Office if I paid her £10,000 and declared £10,000 for tax in Jersey?
Regards
Mark
Submitted: 1 year ago.
Category: Tax
Expert:  Sam replied 1 year ago.
Hi Mark
Thanks for your question, I am Sam and I am on of the UK tax experts here on Just Answer.
You cannot declare £10,000 suffered in tax as this is not the case, so in answer to your question yes you would be in trouble declaring this this 50% payout to your wife as tax suffered (which I am sure comes as no surprise to you)
You must declare the full £20,000 as a payout to you which yes is liable to tax in the UK (as this is where the payout arose) but you may be able to have this tax free in the UK due to non residency (if this has been achieved /or will be achieved during a 5 year period during which time your shares were sold. Then you would have a liability to consider in Jersey - and we are not experts in the jersey tax regime, which I am sure you can appreciate.
So for me to determine your UK position (assuming you wish to proceed as you ask after you Jersey tax position only) then please advise
1) When you left the UK
2) What visits you have had, back to the UK per tax year since you left to live and work in Jersey and were any of these visits for work purposes
3) Whether you have earned any income from this UK directorship in salary or dividends and have you declared this to HMRC
4) How long do you envisage remaining living and working out of the UK
5) Are you a British citizen?
Thanks
Sam
Customer: replied 1 year ago.

Hi Sam

Thank you for your prompt reply. Just to clarify, as I understand it, I can't pay my ex £10,000 and let her pay the UK tax on that and that I personally have to declare the full amount (£20,000) and pay the taxes on that amount.

Mark

Expert:  Sam replied 1 year ago.
Hi Mark
No - the payout was yours so you bear the tax on the payout (£20,000 less annual exemption allowance and any reliefs)
Your wife does NOT suffer the tax as its not legally her payout.
So - yes you personally bear the taxes and declare the full amount.
Your arrangement is made by the courts to pay her this amount nothing to do with the tax man, and the payout is not a considered expense that qualifies for any tax relief or consideration
Thanks
Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13695
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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