Remitting Funds to UK from USA

[Baldrick]

We have a client who is resident in the UK and is a higher rate tax payer. He has a portfolio in the USA which cannot be transferred. It can only be encashed and the $ sent across.

What tax implications, if any, would apply?

Many thanks

[tax me less!]

I do not know from what you say where he is domiciled, or whether he is a US citizen or green card holder. These will dramatically affect the answer, so please do flesh out the question!

[Baldrick]

He is a UK citizen living in the UK. Bought some bonds through a US stockbroker

[Lambs]

B,

In that case, he should be taxed to the extent of his worldwide income and gains, which would include the US, 'though it could be argued that they're in a different world...

From memory, I think there is a withholding tax, when income is paid. Don't forget that the deals should be re-worked into UK Sterling equivalents on the date of the transaction, and that there may be a currency gain when funds are physically transferred from dollars to Sterling.

Regards,

Lambs

[tax me less!]

Lambs is correct.

If these are bonds then you'll need to figure out the accrued income received and paid, under the accrued income scheme (not my idea of pleasure!).
(If they turn out to be mutual funds then the offshore income gain rules are in point.)

[Taxbar]

The bottom line is that to the extent these are offshore income funds that are rolling up income, the profits will be subject to UK income tax @40%.

Us equities and UK funds investing in the US are taxed mmore beneficially as CGT annual allowance plus taper relief.

Daniel Feingold
STP
info@stratax.co.uk

[tax me less!]

I do not believe that Daniel is quite accurate here. It is irrelevant if (and and only if) these are rolling up income. The offshore income gain rules will apply unless the fund is approved by HMRC as a distributor fund. This is almost certainly not the case for any domestic US mutual fund.

However the questioner has not stated that these are funds, rather that they are bonds (presumably munis or government) in which case I stick to my previous answer.