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Where Taxpayers and Advisers Meet

Foreign Interest and Gifts

baz_b
Posts:2
Joined:Sun Feb 19, 2017 11:03 am
Foreign Interest and Gifts

Postby baz_b » Sun Feb 19, 2017 11:33 am

My wife has been UK resident and UK domiciled for 7 years, hasn't had any UK income during this time and has never had a self-assessment demanded by HMRC.

I have a couple of questions regarding interest and gifts:

1. My wife earns interest of up to £1000 per annum from a savings account in Turkey. Tax is charged at source at 15%.

2. Her mother, who is Turkish and lives in Turkey, gifts her up to £4000 per annum from her pension income.

Is there a requirement to report either of these items to HMRC?

If reporting is required:

a) Does this apply to the entire 7 year period?
b) Will she be charged with fines / tax due / late-pay interest payments due to non-declaration?

Many thanks

AmanSood
Posts:216
Joined:Mon Jan 09, 2017 4:12 pm

Re: Foreign Interest and Gifts

Postby AmanSood » Mon Feb 20, 2017 10:55 am

Hi

1) on the basis that your wife is UK resident and UK domiciled, then strictly she would be taxable on her worldwide income. However, on the basis that her only income is the interest income of £1,000 then this would be covered by her personal allowance (currently £11k) which she would be entitled to as a UK resident.

2) The gift of the £4,000 wouldn't be taxable on the basis that this is just a gift and the pension income isn't in your wife's name.

So overall there is no UK tax due. Strictly you may still be required to file/report the interest income to HMRC but on the basis that there is no tax underpayment, it's unlikely that HMRC would seek to impose a penalty. For completeness and being completely open, I would suggest you write to HMRC and disclose the position for last 4 tax years and this would help to minimise the risk of any penalties etc.

If the interest income increases or if your wife starts to earn other income in the UK then you should revisit the position as UK tax may be due.
Advising on UK employment, expatriate and personal taxes
aman.sood@e-taxconsulting.com.
+44 (0) 207 846 0155

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

Re: Foreign Interest and Gifts

Postby maths » Mon Feb 20, 2017 6:34 pm

Amansood

Given that the quantum of income falls below the personal allowance (and there are no capital gains) is it not the case that there is no need to notify HMRC of any chargeability under s7 nor file a Tax Return voluntarily under s8?

baz_b
Posts:2
Joined:Sun Feb 19, 2017 11:03 am

Re: Foreign Interest and Gifts

Postby baz_b » Wed Feb 22, 2017 3:19 pm

Amansood - apologies in the delay replying. I've just signed up and I realised I haven't enabled notifications when users respond to my posts.

Thanks very much for your response, most helpful.

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

Re: Foreign Interest and Gifts

Postby maths » Wed Feb 22, 2017 4:13 pm

I would be disinclined to volunteer any information to HMRC unless legally obliged to do so.

Perhaps Amansood or another poster can correct me if my post is incorrect.


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