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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5148
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I have a question about capital gains tax on foreign

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I have a question about capital gains tax on foreign this a free service or how does it work?
Hello and welcome to the site. Thank you for your question.

This is not a free service.

You only pay for it if the answer/responses are accepted.

Many thanks
Customer: replied 3 years ago.

Hi. yes I did not realise how this question/answer process works. I have a more full description of my question for you now:

I had an investment & a retirement annuity in South africa for a number of years. I recently finalised my emigration to the UK so I decided to bring that money over.

In October 2014 I brought over the investment money (+/-£13500). I deposited this into my stocks & shares ISA.

I have just managed to cash out my South African retirement annuity on the basis of a permanent emigration, and I wish to bring this money over.

I would like to know how much tax I will have to pay on this money, and if there is any tax benefit in waiting until after the new tax year to bring the money over, because in that case I will wait until after April 5th.

Thank you for your reply.

Any income/gains you made whilst you were non-resident in the UK for tax purposes would not be chargeable to UK taxation.

You said you have just managed to cash out your South Africa retirement annuity and wiah to externalise these funds.

Please advise if there a charegable gain on the cash out or is it simply return of capital to you. What is the amount of the gain and what are the proceeds?

Many thanks
Customer: replied 3 years ago.

Thank you for your reply.

I have been living in the UK for almost 7 years, so I believe this means I have been a UK resident in the UK for 7 years?

The investment was a return of capital as it was taxed annually, but the annuity was taxed when cashed.

The Annuity was worth R203 811.44, I was taxed R 32 186.05 & received R171 625.39.

This money is still in South Africa.

Thank you for your reply.

I am not sure how you have been reporting your foreign income in the past.

If you are non-domiciled in the UK for tax purposes, then you don't pay UK tax on your forign income or gains if they are less than £2,000 in the tax year and you don't bring them into the UK.

The rules are different if the income is in excess of £2,000.
Furthermore, you can declare the income and pay UK tax and claim foreign tax credit relief against any tax suffered in South Africa on that income/gain or opt for paying tax on remittance basis.

More information on this can be found here

You may find it is a cheaper option to declare income and gains on arising basis (what you receive/made in the tax year) and pay tax on it in the tax year than to pay tax on remittance basis.

You are advised to consider the above before exercising your option.

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. Please only rate my answer if it is acceptable.

Customer: replied 3 years ago.

Thanks again.

Unfortunately, I am not experienced in these matters at all and I dont really understand all the terminology.

I was born in South Africa and my father considered this his permanent home when I was born. So I assume that means my domicile was South Africa, up until last year when I did formal emigration, at which point I assume that my domicile changed to the UK??

I never declared income or paid tax in the UK on my south african investment, but i did pay tax in South Africa.

The amount is over £2000 so I gather i will have to pay tax.

I was hoping for a simple answer on this it looks like it's more complex than that.

Basically, i am worried that I wont be able to afford the tax bill, which i why Im worried about bringing the money over.

Can you advise roughly how much I might be laible for? And whether it would make a difference If I waited until the new tax year to bring the money over?

Thank you for your reply.

Your domicile is normally determined by where you were born and what was your permanent place.

I see this as South Africa.

If you were to pay UK tax on your income/gains arising outside the UK in that tax year, then you would not have to opt for remittance basis and also pay £30,000 charge as you have been UK resident for nearly seven years.

The annuity amounts to approx £11,400. If this amount is added to your other income in the UK and the total comes to below £41,865 then the tax rate is 20%. You will claim credit for tax suffered on it in South A.frica. The net tax is not likely to be high.
You would be able to claim relief against foreign tax suffered on that same income.

Whether you bring the money this year or next year, you will have to face the same situation.

I would advise you declare the whole amount in the current tax year as normal income/gain in the year and don't opt for remittance basis of paying tax.

I hope this is helpful and answers your question. and other Tax Specialists are ready to help you
Customer: replied 3 years ago.


Ok I will follow your advice & bring the money over now, and declare it.

I understand that I only need to register for self assessment later this year for the current tax year, but I will do that.

Thank you for your assistance. I will click on the "smiley face", but let me know if there is anything else I need to do to confirm satisfaction.

Thanks again