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Where Taxpayers and Advisers Meet

UK tax on transfer of gifted money + tax on life insurance?

gengis1982
Posts:2
Joined:Mon May 29, 2017 4:05 pm
UK tax on transfer of gifted money + tax on life insurance?

Postby gengis1982 » Mon May 29, 2017 4:09 pm

Hello,

I have these two following questions regarding inheritance and tax. I would be very grateful to get your views/input.

Context - I am French and have been living in the UK for the past 9 years. I am therefore a UK resident. My parents are UK non-resident, UK non-domiciled and have no asset or economic interest in the UK. They live in France.

Question 1 - My parents are about to donate a gift of money. The French law authorise parents to donate money exempt of tax every 15 years. From a French perspective, I will therefore not be liable to pay tax on this gift. I am however planning to transfer this money to the UK and want to make sure that I am not liable on any UK tax? I would be grateful if you could please confirm this statement. I do understand that tax will have to be paid on any subsequent revenue generated from this gift. But my question is really on whether tax need to be paid when I transfer the money from France to the UK? Lastly, I am also wondering whether I will be required to declare to the British authorities that I have received this gift?

Question 2 - 15 years ago, prior to moving to the UK, I received a first donation of money, which I then invested in France in a life insurance scheme. According to French law, because this life insurance has now come to maturity (invested for 10 years), I am now allowed to take the money out without having to pay any tax on the generated interest. However, I am now a UK resident and was wondering whether I would need to declare this income and pay tax on it in the UK?

Thanks a lot for your help. I look forward to reading from you.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: UK tax on transfer of gifted money + tax on life insurance?

Postby maths » Tue May 30, 2017 2:03 pm

There is no UK tax liability on the monetary gift from overseas or any need to report it.

The life policy is likely to be a single premium non-qualifying life policy. If so then the gain arising on maturity is subject to income tax. Given that you were not UK resident for 6 of the 15 years some 6/15ths of any gain should not be taxed.

gengis1982
Posts:2
Joined:Mon May 29, 2017 4:05 pm

Re: UK tax on transfer of gifted money + tax on life insurance?

Postby gengis1982 » Fri Jun 02, 2017 5:21 pm

Hi Maths, thanks for your help. Much appreciated!

susandan82
Posts:3
Joined:Thu May 11, 2017 1:21 pm

Re: UK tax on transfer of gifted money + tax on life insurance?

Postby susandan82 » Fri Jun 16, 2017 1:29 am

There are circumstances when the government may levy a tax against life insurance, but this usually occurs only with permanent life policies or with beneficiaries.

marsor
Posts:3
Joined:Sun May 14, 2017 6:46 pm

Re: UK tax on transfer of gifted money + tax on life insurance?

Postby marsor » Wed Jun 28, 2017 9:28 pm

Very interesting. Can I add-on a slight variation of the life-insurance question?

I bought a fund-based life-insurance in Germany in 2004 with monthly premiums, moved to the UK in 2008, stopped paying premiums in 2010 and finally liquidated the life-insurance in 2016 (EUR ~50,000). Under German law I didn't have to pay taxes, since I held the insurance for >12 years.

Does maths answer hold for this as well and I have to pay CGT on 8/12ths of the gains? Can I somehow deduct the (significant) fees I paid on the insurance (sign-up fee, administration fee, etc)?

Thanks a lot!


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