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Sam, Accountant
Category: Tax
Satisfied Customers: 14195
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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In 2002 my wife invested about £65,000 in a non-reporting roll-up

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In 2002 my wife invested about £65,000 in a non-reporting roll-up investment fund in Jersey. The money used for this investment was provided by her South African uncle, and mainly arose in South Africa. Her uncle has since died. In August 2014, when the value of the holding had increased to about £120,000, the ownership of the holding was varied so as to include my wife together with our three sons, two of whom live in the UK and the third in Jersey. In September 2014, with my wife’s agreement, about £55,000 in total was withdrawn from the fund by the two sons resident in the UK.
My question is: What liability for taxation arises from these processes during the tax year 2014-15, and for whom?
Thanks for your question
The liability will fall on your wife as she was the main investor until Aug 2014 - and at that stage she would have had a capital gain on the value transferred to the sons. (You indicate that the Uncle provided the money but not that he had any involvement with the investment itself)
This is based on the assumption that your wife resides in the UK, which of course may not be the case.
And an income tax on the sons when they withdraw this amount - (if a profit had been made in the value at the time they were gifted this investment and the date of withdrawal.
So both of these considerations fall within 2014/2015
Let me know if you require any further assistance.
Customer: replied 2 years ago.
My wife does indeed live with me in the UK. The investment was jointly in my wife's and her uncle's names until the beginning of 2004, when her uncle (who lived in South Africa) withdrew, leaving my wife as the sole investor. The valuation then was about £73,000. Am I right in thinking that the capital gain should be assessed as between then and August 2014 - i.e. about £47,000? Also I assume that the £11,000 allowance would apply.
Thanks for your response and the additional information.
Then your wife would have had a requirement to declare her share of this investment and any profits made to HMRC from the date the investment was made through to beginning of 2014, then complete share from 2004 to Aug 2014
Then your wife would have had a capital gain in Aug 2014 with the transfer of shares to her sons, and this capital gain which you now ask for advise on the amount - which is over and above what your question suggested would be required, so really should be listed as a new question - after rating this one, However as this appears to be your first time on Just Answer, I shall provide this additional information under this listed amount.
So this would be half her share until 2004 plus the other half share from 2004 - deducted from the value at the time of transfer - this would be the gain - less £11,00 (as this was the 2014/2015 capital gain annual exemption allowance)
Then any remaining gain either at 18% or 28% tax - this is dependent on her annual income for 2014/2015 (so if in excess of £41865 then all the gain would be at 28% - if her annual income was less than £41865 - then whatever unused basic rate band will allow the equivalent of gain to be at 18% and any remaining gain at 28%)
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