UK Tax
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Answered in 28 minutes by:
3/8/2010
Andrew Baker(baktax), Personal Tax Adviser
Category: UK Tax
Satisfied Customers: 756
Experience: 35+ years experience in income tax, CGT, non-residence
VerifiedHi
As your French savings plan/life insurance will not be a UK qualifying policy, the gain made will not be exempt from UK tax.
As a resident of the UK you will be liable to UK tax on worldwide income and gains unless you are non UK domiciled and wish to claim the remittance basis ie overseas income and gains are taxed when brought into the UK. The downside of the remittance basis being you lose your entitlement to personal allowances and capital gains exemption. In addition having been resident in the UK for at least the whole or part of 7 out of the previous 9 tax years to the tax year of assessment, you will have to pay an additional £30000 tax charge if the remittance basis is to be claimed. Therefore it may well not be cost effective to claim this.However, if unremitted income and gains are less than £2000 in the tax year, you can still be taxed on the remittance basis and receive your full tax allowances/exemptions and not have to pay the £30000.
You will therefore see that unless the policy gain remains unremitted to the UK (assuming you are non-domiciled) it will need to be declared on your tax return.
I hope this helps.
Kind regards
Andrew (baktax)
Hi Maureen
Yes, you only pay tax on the gain (not the capital which is tax free) so make sure you get a statement from the French investment provider which clearly shows the calculation of the gain made.
For those aged under 65 the first £6475 of total income in the current tax year 2009/10 is tax free. Generally, the next £37400 is taxable at 20% and 40% thereafter.
Domicile/the remittance basis is a complex subject.If you do not have any other income, investments or assets outside the UK, it is unlikely that you need to be concerned with this once you have encashed your French policy. However, if the savings plan is substantial, or you have other overseas investments and are likely to return to France permanently in the future, it would be worth seeking specific professional tax advice from a tax adviser or accountant who is familiar with this subject.
I hope this helps.
Kind regards
Andrew (baktax)
Andrew Baker(baktax), Personal Tax Adviser
Category: UK Tax
Satisfied Customers: 756
Experience: 35+ years experience in income tax, CGT, non-residence
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