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Thanks for your explanations, It is much more complex than I expected given that an "Assurance vie" is a very common product in France (40% of French residents have one!).
Could you confirm there is no UK tax liability if no withdrawals are made to the "Assurance Vie"?
Also do you know what would be the tax situation of a UK resident non domiciled opting for the remittance basis of taxation if a withdrawal is made and not remitted in the UK?
As a UK resident non-domiciled individual, you have access 'remittance basis' on your overseas income ie you are only liable to UK tax on income and capital gains which arise in the UK but only liable to UK tax on non-UK income and capital gains if remitted to the UK.It will also possible to take 5% withdrawals into the UK without them being regarded as taxable remittances - however the process is somewhat complex. However once you claim the remittance basis you lose the entitlement to the UK personal allowance for income tax and the annual exempt amount for capital gains tax Hence this could be a difficult choice.
Again i would suggest get a tax adviser for a fee of say £100-£200 and he can assist you in making the right choices for you - taking into account your income and the expected withdrawals etc - find such experts by googling or try such sites as this one HERE
Thanks again for your answer.
I am confused regarding your answer on the application of the remittance basis of taxation to an "Assurance vie" withdrawal (assuming the taxpayer is entitled to and choses the remittance basis of taxation).
In the following document:
"Note 3 – the remittance basis does not apply to chargeable event gains undera policy of life insurance, life annuity or on a capital redemption policy.These are taxable on the full amount arising in the year irrespective ofwhether they are remitted to the UK or not."
The way I understand it I would not allowed to claim the remittance basis of taxation on an "Assurance vie" withdrawal (larger than 5%). Do you have another interpretation?
Yes - The link is correct in saying that if an insurance policy/bond is encashed then any chargeable event gain is taxable as it arises since the remittance basis does not apply to such gains. This applies to chargeable event gains (take a look here LINK to see what is considered a chargeable event). Chargeable event does not include withdrawls of less than the 5% tax deferred allowance. Therefore It will be possible to take 5% tax deferred withdrawals into the UK without them being regarded as taxable remittances however there some conditions as i explained earlier. To take such withdrawals the tax office would need to check if the original premium were made with untaxed foreign income and gains that would have been taxed on the remittance basis if remitted to the UK in which case remittances are regarded as derived from the untaxed foreign income and gains used to purchase the policy. This also takes into account Double tax treaty. This is somehow complex. Hence if you want to take this further have somoene check this out for you.