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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3933
Experience:  FCCA FCMA CGMA ACIS
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I have an account (Interest bearing) in South Africa. Last

Customer Question

I have an account (Interest bearing) in South Africa.
Last year it produced about 10k in income which was
taxable at the lowest rate as its my only income there.
Interest rate was around 6%
My tax advisor here says I am taxable in the UK (Resident here)
at the difference in rates. Here I pay tax at the highest rate.
In the same period the currency lost 25% against the GBP.
Also there are Fx controls in SA so it is questionable as to whether
its realisable.
So I am paying tax on virtual income where the capital depreciated
25% and which may not be realisable.
I also keep my SA residency current, taxes paid etc.
Can you clarify whether I must pay tax under the double taxation
agreement or can I claim dual residency and get relief.
Kindly advise
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. If you reside in the UK for more than 183 days in any one tax year then you are liable to UK tax on your world wide income. Thus your SA interest must be declared on your annual Self Assessment Tax Return. Under the Double Taxation Treaty between the UK and SA income streams can only be taxed in one jurisdiction, but the Treaty does not protect you from differences in rates of taxation. The tax deducted by SA is allowed as a tax credit against any UK liability on the same Income Stream so there will be more tax to pay, an additional 34% or 39% if you are on 45% tax rates. I am so sorry to have to rain on your parade. I concur with your accountant's advice.

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