Money transfer to UK

by **dash55** on Sun Mar 14, 2010 7:30 pm

I have some money in a joint account with my father overseas. This is made up of money earnt abroad on which tax has been paid locally. The money is in Euros.

I am now in the fortunate position whereby with the agreement of my father, I would like to repatriate this money and use it to pay off a chunk of the mortgage on my primary residence. However I am concerned about how best to go about it for tax purposes. I have never brought money back from abroad before.

Would the transfer of this money be considered a gift ? (the reason I ask this is that my father is now in his late seventies).

What is the best way to transfer this money back and under what circumstances might the taxman be interested ? (ie would it be better to bring it back in chunks rather than in one goe to avoid unwanted attention ?)

by **maths** on Sun Mar 14, 2010 10:54 pm

What is the domicile and residence status of you and father.

Who earned the monies to which you refer and was that person UK resident or not at the time.

by **dash55** on Mon Mar 15, 2010 12:23 am

We are both UK residents.
We both earnt the monies and were UK residents at that time

by **wamstax** on Mon Apr 05, 2010 11:32 am

We need to know what you and your father's domicile was when the money was earned. If you were both UK domiciled and the money was earned while you were resident in the UK then you should have returned the money for UK tax purposes. You would of course be entitled to what is called tax credit relief for the tax you paid in the local jurisdiction (up to the amount of the UK tax liabilities on the same income)

If you were not UK domiciled and the money was earned prior to 5th April 2008 then as long as it was not remitted - or constructively remitted by being enjoyed or used in the UK - you would not be taxable on the income at the tiem it was earned. However when it is subsequently remitted to the UK it would become chargeable to UK tax.

Please see the following link http://www.hmrc.gov.uk/cnr/hmrc6.pdf and at part 5 which was updated in February 2010

by **maths** on Mon Apr 05, 2010 2:33 pm

A remittance of your part of the monies in the account will be subject to income tax (I assume you are non-UK domiciled; you do not say).

If your father (who I assume is non-UK domiciled; you do not say) gifts his share to you prior to remittance no UK tax will arise thereon on remittance.

by **dash55** on Mon Apr 05, 2010 5:16 pm

Thanks to maths and wamstax. Sorry, I thought I'd answered the question about domicile and residency earlier. We are both ordinarily resident in the UK and UK taxpayers, and have been throughout the time the monies have been earnt. My understanding is also that we are UK domiciled.

Any thoughts as to the most tax efficient way of bringing the money back to the UK ?

by **wamstax** on Mon Apr 05, 2010 5:34 pm

Hi there,
I am sorry but the income that you earned abroad should have been reflected in your tax returns for the tax year in which you earned the money - whether you brought it back to the UK or not. This would be on the basis that you and your father were effectively british born (UK domiciled).

If you didn't show the income in the appropriate tax return I am afraid that if there was unpaid UK tax (after giving credit for overseas tax deducted) you may both be in for a penalty (depending on the amount of unpaid tax) and interest on the tax not paid at the correct time

Sorry to be the bearer of bad news and as the income would have been chargeable when earned in the past there is probably nothign at all that you can do to mitigate the resultant tax charge - except get any error corrected as soon as possible.

If you were non-UK domiciled (i.e. father born outside Uk and not changed to a UK domicile of choice) then the guide previously referred to should help you to decide what to do about repatriating your money