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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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I came to the UK to study 's degree. Finished

Resolved Question:

Hello,
I came to the UK to study for Master's degree. Finished my studies last year and now work in the UK on Tier 2 general visa. I have some savings abroad (earned prior to moving to the UK), and I don't earn any interest on these savings. I want to make a small investment in the startup of my classmate and this investment qualifies for SEIS tax relief scheme. Two questions:
1. Can I transfer the funds to the company from my bank account abroad under SEIS scheme?
2. Are there any tax implications for transferring my savings to the UK from the foreign bank account?
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. 1 I'm not aware of any reason why the investment monies cannot come directly from offshore but if it were me making the investment, I'd bring the cash into the UK before making it. It will just make things simpler. 2 Assuming you can prove that the savings were earned before you became tax resident in the UK, you won't have to pay UK tax on those monies. Even if that were not the case and the monies were earned after your arrival in the UK, you could still qualify for relief from UK tax on that income by using the Business Investment Relief rules which you can read about here. You should try to keep your overseas savings split between those earned before you came to the UK and those earned afterwards. I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
Thank you. But why would you rather bring money in cash? The amount is rather substantial for just bringing in cash and traveling also requires time and money.I had seen the link to the rules that you've provided before however was hoping for more professional and detailed answer. How can I prove that the money was earned before I came to the UK? I find it rather difficult. I would like to make sure that if I make direct investment to the company's account from abroad, then according to these rules I 1) do not have to pay tax on the money brought from abroad 2) still can get a tax break. Are there any doubts about it? What is the normal process? Which documents do I have to submit for tax relief? Happy to jump on a call if it's more convenient.
Thank you.
Expert:  TonyTax replied 1 year ago.
I have dealt with many EIS/SEIS claims for clients so I know what I'm talking about. I'm also very well aware of the tax rules for non-UK domiciled individuals. I will get back to you a bit later this morning.
Expert:  TonyTax replied 1 year ago.
If you look at RDR1 on page 82, you will see some notes on record keeping. Any income or gains you made before you became resident in the UK are not taxable in the UK if you bring them into the UK, hence the reason it is important to be able to differentiate between income and gains made before and after your arrival in the UK. I don't know what sources of non-UK income and gains you have and how they have been mixed so I cannot really comment on how you can prove what was earned before you came to the UK.As you are non-UK domiciled, you have the choice as to whether you pay tax on non-UK source income earned after your arrival in the UK or not. If you choose the remittance basis of assessment, you will only pay UK tax on income and gains you bring into the UK (but not on income and gains earned before your move to the UK). See section 9 of RDR1.If your investment in the SEIS company is made out of monies you had before your arrival in the UK, then you can bring those in or invest them directly from abroad and pay no UK tax. If your investment in the SEIS company is made out of non-UK income and gains you made after your arrival in the UK, then those income and gains will be subjected to UK tax unless you claim exempion from UK tax for them under the Business Investment Relief rules I mentioned in my previous answer.When you invest in a company through EIS or SEIS, you are issued with a certificate EIS3 or SEIS3 by the company which prove it has the appropriate clearances from HMRC. You only need to submit the certificate to HMRC if you don't complete a self-assessment tax return.Relief through the Business Investment Relief scheme can be claimed through a self-assessment tax return in conjunction with SEIS or EIS relief (see here). whilst BIR effectively leaves foreign income invested in the UK out of charge to UK tax, relief under EIS or SEIS is dependent on you having income taxable in the UK. The relief is then offset against any UK tax you have paid or would otherwise pay were it not for the SEIS or EIS investment.
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Customer: replied 1 year ago.
Thank you Tony!

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