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Where Taxpayers and Advisers Meet

Tax on gift of investment bond

NonDom41
Posts: 40
Joined: Tue Nov 28, 2017 3:03 pm

Tax on gift of investment bond

Postby NonDom41 » Fri Jan 25, 2019 3:28 pm

I am a non-domiciled person in the UK and file my income tax returns of my worldwide income on the arising basis. I have a bank account outside of the UK with an investment bond and would like to give this bond as a gift to my son. He lives with me in the UK. It would be a gift/transfer from my foreign bank account to his foreign bank account (same bank). This bond has nothing to do with the UK.

I think this gift transfer is UK-tax free because I have been resident for only 14 years and thus am still considered non-domiciled (I know after 15 years I would be deemed domiciled).

However, is this gift transfer subject to capital gains tax (or any other tax) even though I am under the 15-year time period?

AGoodman
Posts: 805
Joined: Fri May 16, 2014 3:47 pm

Re: Tax on gift of investment bond

Postby AGoodman » Tue Jan 29, 2019 2:24 pm

Your domicile is irrelevant for CGT unless you elect to be taxed on the remittance basis.

That said, assuming you took out the bond (i.e. did not buy it or receive it as a gift), a gift to your son should not be subject to income or capital gains tax:

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg69040

NonDom41
Posts: 40
Joined: Tue Nov 28, 2017 3:03 pm

Re: Tax on gift of investment bond

Postby NonDom41 » Tue Jan 29, 2019 9:22 pm

Thank you for your explanation.

However, if I give this gift to my son after 15 years residence (and I am deemed domiciled) income/gift tax or CGT would be due. Correct?

AGoodman
Posts: 805
Joined: Fri May 16, 2014 3:47 pm

Re: Tax on gift of investment bond

Postby AGoodman » Thu Jan 31, 2019 1:29 pm

No, the gift is exempt from Income tax/CGT in any case.

IHT is only an issue if you die within 7 years of making the gift


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