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bigduckontax, Accountant
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I am an Australian citizen living in Australia with

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Hello. I am an Australian citizen living in Australia with my wife and small children who have both British and Australian citizenship.
We plan to immigrate to the UK in about 12 months time, indefinitely, where I seek to find employment. My wife and I have jointly opened a bank account in the UK and will have savings in this account before my visa is approved. The account is a 1 year fixed term deposit.
What are the tax implications (if any) upon this account maturing and funds being accessed after the 12 month period? Neither of us will be residents of the UK at this time, my wife will be a UK citizen returning home and I will be on a spouse visa.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. As you are non resident in the UK these bank deposits may be subject to tax. Your spouse, as a British Citizen, is entitled to a personal allowance, currently 10.6K. As an Oz citizen you are not, this concession was withdrawn in 2010. Deposit takers will deduct tax at the basic rate of 20%. Your wife can claim this back, unfortunately you cannot! There is a Double Taxation Treaty between the UK and Australia which precludes the same income stream from being taxed in both jurisdictions. This is achieved by means of tax credits, the tax deducted in one country being allowed as a credit against any liability in the other. The Treaty does not protect you from differences in rates of taxation. Here is the Australian Taxation Office advice on the subject: 'If you're an Australian resident for tax purposes, you are taxed on your worldwide income, so you must declare any foreign income in your income tax return. Foreign income includes:foreign pensions and annuitiesforeign employment incomeforeign investment incomeforeign business incomecapital gains on overseas assets.As your foreign income may also be taxed in the source country, it is potentially subject to double taxation. To overcome this, Australia has a system of credits and exemptions and has signed tax treaties with more than 40 countries, including all our major trade and investment partners.' I do hope that you have found my reply of assistance.
Customer: replied 2 years ago.
Thank you for your help. I can tell you the money in this account has been gifted to us by my wife's father (a UK resident but who is retired and no longer working)
That gift will create a Potentially Exempt Transfer (PET) in his Inheritance Tax (IHT) affairs. PETs run off at a taper over seven years and in the event of decease within that period are added back to the estate for IHT. IHT kicks in at 325K at a flat rate of 45%. PETs are the first to suffer IHT and in the event of the estate being unable to meet this liability it cascades down to the beneficiary for immediate payment. A person may give away up to 3K in any one tax year and may bring forward one year's only allowance making a possible total of 6K in any one tax year. Please be so kind as to rate me before you leave the Just Answer site.
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Customer: replied 2 years ago.
Ok thanks. Funds will be in the region of 65,000 pounds
Customer: replied 2 years ago.
Hi Keith. What about this amount of approx 65,000? What would be tax implications for gift of this amount?
Thank you for your support. The implications involve the donor'd IHT position. In the event of the death the 66K (the PET) would be added back to his estate for IHT purposes at reducing levels over the seven years the PET takes to run off. Here are the reducing steps [source: UK Gov web site]: 'Years between gift and deathTax you pay (if not qualified for reduced rate) less than 3 - 40%3 to 4 - 32%4 to 5 - 24%5 to 6 - 16%6 to 7 - 8%' The beneficiary only gets involved if the donor's estate is inadequate to meet the IHT on the PET as I explained earlier..