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Hello, I am a Portuguese citizen living in Portugal with no

Hello, I am a Portuguese citizen...
Hello,
I am a Portuguese citizen living in Portugal with no ties to the UK.
I plan to be a student in the UK doing a full time university course with a duration of 18 months, starting in September 2013.
I don't plan to work in the UK or continue living there after the course.
In Portugal, I sold my primary residence in May 2013 and there are capital gains. According to Portuguese tax law, these gains will not be taxed if they are reinvested to buy another primary residence within 36 months - and this is what I intend to do.
In addition, I receive rental income from an apartment that I let out in Portugal. I will need to send this money to the UK for my maintenance during my studies. As this value is not very high it is possible that I would need to use additional funds provided by my parents, who live also in Portugal and have no ties with UK.
The Portuguese fiscal year goes from January 1 to December 31.
I need to know what the tax implications, if any, in the UK and in Portugal are, and what should I do in each country?
Thanks
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Answered in 31 minutes by:
8/10/2013
TaxVince
TaxVince, Accountant
Category: UK Tax
Satisfied Customers: 965
Experience: Chartered Accountant >20 years + Qualified IFA
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MamaTax :

Hi

Its MamaTax Here!

MamaTax :

Overseas students coming from any of the countries with a double taxation agreement with the UK (that includes Italy) will not need to pay tax on any income and gains that arise outside the UK which they subsequently bring to the UK for their maintenance or education. Money is for your maintenance if it is used to fund your normal living expenses while in the UK. Money brought to the UK to pay for food, accommodation, and materials is all included, but bringing in money to invest is not.
In the past HMRC have said that if a student brings £15,000 or less to the UK in a tax year (6 April one year to 5 April the next) they will treat that money as being for the student’s maintenance. Money that is used to pay for a student’s course fees will also be added and counted as for a student’s maintenance.

Therefore if i were you i would not get worried about UK tax at all.

HMRC has prepared a guide that you will find helpful here: LINK

MamaTax :

Hope this helps. If not - please let me know. If satisfied please could you rate the question before you go.

Customer:

Hi,

Customer:

thank you for your reply. My main concern is the capital gain from the sale of my primary residence since I will not be bringing this amount to the UK. I wonder whether my situation would not fall within the case described as "You have income and gains overseas and you bring some of them to the UK, but leave the balance of the income or gains overseas" due to the existence of gains from the sale of my home in Portugal.


Would these gains not count to assess my tax situation while studying in the UK because I am a student or perhaps because they originated from selling my own home (and these are tax free)?


If, indeed the visiting student situation applies, would I need to do anything tax-wise in the UK (e.g. tax declaration, ...)?
Customer:

thank you for your reply. My main concern is the capital gain from the sale of my primary residence since I will not be bringing this amount to the UK. I wonder whether my situation would not fall within the case described as "You have income and gains overseas and you bring some of them to the UK, but leave the balance of the income or gains overseas" due to the existence of gains from the sale of my home in Portugal.


Would these gains not count to assess my tax situation while studying in the UK because I am a student or perhaps because they originated from selling my own home (and these are tax free)?


If, indeed the visiting student situation applies, would I need to do anything tax-wise in the UK (e.g. tax declaration, ...)?
Customer:

Hello,Thank you for your reply. My main concern is the capital gain from the sale of my primary residence since I will not be bringing this amount to the UK. I wonder whether my situation would not fall within the case described as "You have income and gains overseas and you bring some of them to the UK, but leave the balance of the income or gains overseas" due to the existence of gains from the sale of my home in Portugal.


Would these gains not count to assess my tax situation while studying in the UK because I am a student or perhaps because they originated from selling my own home (and these are tax free)?


If, indeed the visiting student situation applies, would I need to do anything tax-wise in the UK (e.g. tax declaration, ...)?
Customer:

Thank you for your reply. My main concern is the capital gain from the sale of my primary residence since I will not be bringing this amount to the UK. I wonder whether my situation would not fall within the case described in HMRC's guidance text for students in the LINK you sent me: "You have income and gains overseas and you bring some of them to the UK, but leave the balance of the income or gains overseas" due to the existence of gains from the sale of my home in Portugal.
Would these gains not count to assess my tax situation while studying in the UK because I am a student or perhaps because they originated from selling my own home (and these are tax free)?

If, indeed the visiting student situation applies, would I need to do anything tax-wise in the UK (e.g. tax declaration, ...)?
In summary: do I need to say/tell/deliver anything to HMRC?
And finally will I be considered Resident or non-Resident in the UK, taking into account the double taxation treaty between Portugal and the UK? This might be relevant to open a student bank account in the UK to pay for accomodation, e.g.
Thank you and Regards.

Customer:

Sorry, the test went out all garbled. This is what I meant:

Customer:

Thank you for your reply. My main concern is the capital gain from the sale of my primary residence since I will not be bringing this amount to the UK. I wonder whether my situation would not fall within the case described in HMRC's guidance text for students in the LINK you sent me: "You have income and gains overseas and you bring some of them to the UK, but leave the balance of the income or gains overseas" due to the existence of gains from the sale of my home in Portugal.
Would these gains not count to assess my tax situation while studying in the UK because I am a student or perhaps because they originated from selling my own home (and these are tax free)?

If, indeed the visiting student situation applies, would I need to do anything tax-wise in the UK (e.g. tax declaration, ...)?
In summary: do I need to say/tell/deliver anything to HMRC?
And finally will I be considered Resident or non-Resident in the UK, taking into account the double taxation treaty between Portugal and the UK? This might be relevant to open a student bank account in the UK to pay for accomodation, e.g.
Thank you and Regards.

MamaTax :

Your foreign income or gains from letting out a property, or from interest on a bank account etc are not a problem because of double taxation agreements entered into by the UK with Italy. That income is taxed in Italy. However if you are to work in UK, then you will need to register for tax in UK.

MamaTax :

The foreign income or gains also cover the capital gains from the sale of the property - no need to worry or do anything in UK.

TaxVince
TaxVince, Accountant
Category: UK Tax
Satisfied Customers: 965
Experience: Chartered Accountant >20 years + Qualified IFA
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Customer reply replied 4 years ago

Thank you for replies. I think the only standing issue is the resident/non-resident status and if that impacts your advice in any way.

Once you come to live in UK and spending generally 90 days a year in UK you become UK tax resident – by Automatic residence tests rules. (you can read more about statutory residence rules –HERE).. From 6 April 2013, the legislation allows a tax year to be split into two parts (previously, tax years have been split by concession under Extra Statutory Concession A11 otherwise one was treated as either UK resident or non-UK resident for a full tax year and at all times for that tax year). Split year treatment means that you can be treated as UK resident for only part of a tax year, if you come to the UK part-way through a tax year and taxed on the basis of being non-UK resident for the part of the tax years during which you are abroad.

However this only affects you if you are working in UK or earning other income excluded from the “students maintenance income/gains” you currently have. To be on the safe side you can ring HMRC on 0300 200 3300 and notify them you are a student and you don’t work in UK but have maintenance income for your studies. HMRC will decide whether to send you tax returns to complete –I don’t see them doing that as all your income is exempt from UK tax. Even if they do send you self-assessment returns – you will complete them but without any tax implications on you.

Regards

 

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