I have a Japanese client who although she has been UK resident for 30 years retains Japanese domicile. She has approximately £150K on deposit in a Jersey bank which has been there for 15 years plus. RBC not relevant as the client has had below £2,000 worth of overseas deposit interest.
She now wishes to remit the majority of the £150K to assist her only child who is UK resident with the purchase of a property here.
She has no record of how the capital accrued except to say it was from a mixture of earnings and savings in Japan before she became UK resident, gifts from family over the years and some earnings in Japan which she paid Japanese tax on during the time she was UK resident.
Any thoughts as to how to approach the UK tax position?
Replies (10)
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Not clear from what you say what UK tax position has to be approached.
You say client has not opted to be taxed on the remittance basis. So client has been taxable in the UK on worldwide income, including interest on the Jersey deposit you mention.
So why are you asking about the tax implications of remitting the Jersey funds to the UK, when you say yourself that the remittance basis does not apply?
Do you mean that client has not been declaring interest on the Jersey deposit?
Gift to child
Assuming child is adult, a simple direct gift offshore to an offshore bank opened by child will not be a remiittance by either of them. It will be PET for IHT but is within nil rate band, so if no other transfers of value within previous seven years no risk of a chrarge arising on the gift to child on donor'sdeath within the next 7 years
Still not clear
But should your client not have been declaring the Jersey interest, as she did not opt for the remittance basis to apply and was therefore taxable on her worldwide income, remitted or not?
Or am I missing something?
But surely these days you have to pay the remittance basis charge for the remittance basis to apply? How can someone claim to be taxed on the remittance basis without paying the charge? What am I missing?
If you fle on the remittance
If you file on the remittance basis and have less than £2,000 unremitted foreign income/gains in a year you do not need to pay the RBC for that year, and you retain your personal allowance & annual exemption.
Ah so there is a de minimis threshold below which the arrangements I thought I was aware of do not apply? You live and learn.
So if your unremitted foreign income is £2,001 or more you either pay UK tax on it, or pay the RBC?
Assuming that the usual condtion regarding being considered long-term resident is met, yes.