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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 6157
Experience:  FCCA FCMA CGMA ACIS
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I currently have money invested in a US brokerage account as

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I currently have money invested in a US brokerage account as I invest and trade in US stocks and trade in their stock market. I am a UK citizen and I am under the impression that there is a tax treaty between the US and the UK. Will the US tax any capital gains I have generated before I receive it?
Assistant: What are the assets or property for this capital gain?
Customer: Stocks and derivatives such as options.
Assistant: Anything else you want the Accountant to know before I connect you?
Customer: I understand that if my capital gains are only taxed in the UK there is a threshold whereby my capital gains are not taxed. I am not so sure if the US can get around this by taxing it in someway before it leaves the US - lets say if I decided to transfer some of my capital gains back to my UK current account or to any place in the UK for that matter.

Hello, I am one of the experts on Just Answer and pleased to be able to help you with your question.

Any net gains from your US trading will be subject to UK Capital Gains Tax (CGT). You have a non-cumulative Annual Exempt Amount (AEA), currently 11.7K, to offset any gains. Under the Double Taxation Treaty between the UK and the USA, any tax deducted by the IRS will be allowed as a tax credit against your UK CGT liability.

I think that covers the position fairly succinctly.

Customer: replied 9 days ago.
Thank you for the information. Just to be sure there is no way the US can deduct anything from the capital gains I generate? Just to make sure as a UK citizen I will not be taxed by the US in someway and only by the IRS in the UK?

The IRS is the US Federal Taxation service. HMRC are the UK equivalents. I would expect your US brokerage account to handle the CGT position with the IRS.

Customer: replied 8 days ago.
Ok thanks for this information. So if the IRS will handle the CGT will they recognise the AEA of 11.7K due to the tax treaty that is in place between the two countries?

No, if the IRS does deduct tax then the Double Taxation Treaty provisions will come into effect and you can use the tax credit to offset tax over the AEA. There is a danger of irrecoverable tax credits here if your gains in the year are below the AEA.

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Customer: replied 8 days ago.
Okay thank you for the information this has been a significant help. Many thanks, Tom

Delighted to have been of assistance, Tom.

Thank you for your support.

Customer: replied 8 days ago.
Sir, could I ask you another question in relation to our previous conversation?

Certainly, you can always follow up after rating.