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bigduckontax, Accountant
Category: Tax
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I have a question about taxation on overseas money if

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Hi I have a question about taxation on overseas money if someone could help?
Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: My 60 year old mother has an investment portfolio in Guatemala where she used to live - she now lives back in the U.K. and is resident here (she is British) She re invests the money each quarter and the account has grown substantially and now has a six figure dollar amount in it. She would like to start to give some of this money to her family in the U.K. What is the best way for her to go about this such that tax does not need to be paid? Many thanks for any help you can give.
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Customer: Does the Accountant deal with UK tax issues, and what will the final amount payable be?

Hello, I am one of the experts on Just Answer, and pleased to be able to help you with your question. I am an UK accountant and a Chartered Secretary.

The UK has no gifts tax regime so any gift made by your mother creates a Potentially Exempt Transfer (PET) in her Inheritance Tax (IHT) affairs. PETs run off at a taper over 7 years and in the event of her decease within this period are added back to her estate for IHT purposes. PETs are the first to suffer IHT and if her estate is insufficient to meet the tax on the PET then the liability cascades down to the beneficiary for immediate payment.

Sale of some investment may trigger Guatemala Capital Gains Tax (CGT) at 10%. It will do the same for the UK and, as there is no Double Taxation Treaty between the UK and G, there is a danger of double taxation there. UK CGT is at 10% or 20% or a combination of the two rates depending on your mother's income including the gain in the tax year of disposal. She has a non cumulative Annual Exempt Amount (AEA) of 11.3K to offset this gain. If she limits her gift each year to the AEA she will have no UK CGT tax liability.

I do hope that you have found my reply of assistance.

Customer: replied 4 months ago.
That is very helpful thank you. Can I ask what you would advise as the best way to gift say $15 000 to save on exchange charges. I am not sure about bank charges and should I say to my bank what the money is and where it has come from?

You should advise your bank of incoming funds and their source to preclude any money laundering inquiries a large sum might attract.

The HMRC exchange rate is 0.1059. Do you mean $15K US dollars or Guatemala quetzats?

Customer: replied 4 months ago.
Thanks. The fund is actually in dollars. Although the investment company is in Guatemala I th8nk they are register3dd in British Virgin Island and the money is held in a US account in dollars. Would you advise I use one of those money transfer companies who guarantee you set rates?

Unless you have experience of such firms or good recommendations I would tend to stick to banks. BVI is, of course, a tax haven, so transfers in and out are bread and butter to reputable organisations. .

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