26 July 2022Newsletters and Updates
The advice for bringing capital into the UK changed over three years ago.
There was a window of opportunity for UK resident individuals who were non-UK domiciled to “cleanse” their offshore accounts so that they could remit funds to the UK free of UK tax. This window closed on 5th April 2019 so that it is no longer possible for someone who is living in the UK to cleanse their funds into clean capital, income and capital gains in order to remit tax free cash to the UK.
From 6th April 2019 onwards it has been important for those who are moving to the UK to live to separate out their funds outside the UK between the original capital, income earned on that capital and capital gains. This means identifying the three constituent parts, and making arrangements so that income and gains that arise after the person has arrived in the UK are kept separate by separating them into different bank or broker accounts. Their finances are “clean” up to the point that they move to the UK and become resident here. That clean capital can then be remitted to the UK free of tax whereas the income or gains would be subject to income tax or capital gains tax respectively if remitted. This segregation process must be set up before the individual arrives in the UK.
We have experience of one individual who came to see us after arriving in the UK and wanted to bring in cash to buy a house. Unfortunately, this individual had been in the UK for a number of months so cleansing wasn’t possible and they hadn’t segregated accounts before arrival with the result that what is known as a “mixed” fund was remitted and was taxed on the element that represented income and gains.
This shows the importance of taking the right advice before leaving for the UK.