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Treatment of tax-free grant received in Mexico

Grant received for creative activities in Mexico (tax-free) and then transferred to UK bank account

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Will be receiving the grant every month for next three years into Mexican account from the government for creative activities and the same is tax-free there. Then I transfer the funds into my UK account as I spend mostly in UK and living here only. I have a dual nationality. I have a Spanish nationality, which is how I settled in the UK, and I have a Mexican nationality, which is how I got this fund. 

What should be the treatment of the grant from tax point of view? Do I need to report on my self-assessment tax return of the same will be considered as tax-free?

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By jonharris999
18th Sep 2020 11:15

Are you a UK resident for tax purposes?

Was the grant received in Mexico in a year when you were a UK resident?

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By Arihant
18th Sep 2020 11:24

Yes, I am a UK resident for tax purposes and started to receive the grant from April 2019. This is not taxable in Mexico, however, I use to transfer the same into my UK bank account to meet the expenses as I reside here only since 2018.

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By jonharris999
18th Sep 2020 16:32

I'm not an expert on Mexico, but I'm confident that the tax treatment of this income in the UK will turn on what you are spending it on, and where that activity takes place. Many kinds of state grant for creative activities are taxable business income in many countries, definitely including the UK. I don't have a real historical case to rely on, so I don't know if the fact that it is not taxable in Mexico would allow (what appear to be) quite normal DTT provisions to be disapplied, but I rather doubt it off the top of my head.

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By Anonymous.
18th Sep 2020 11:21

Arihant Mehta wrote:

What should be the treatment of the grant from tax point of view? Do I need to report on my self-assessment tax return of the same will be considered as tax-free?

Impossible to tell on the basis of the information given. You should engage an accountant to help you.

Your colleagues may be able to help as your job title "Accounting and Tax Asscoiate" (sic) suggests you are in the biz.

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