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The American

Smart Living in the UK

What happens when you want to bring money to the UK? As an American living in the UK, almost nothing related to your financial affairs is easy. The consequences of seemingly simple decisions – such as how to pay for a new home or purchase a mutual fund - may create unnecessary tax charges and complexities. There are a number of key milestones that occur, from the time you arrive in the UK to the time you potentially approach and reach retirement. Many of these changes will impact the appropriate wealth management strategies for American expats. Understanding how rules will change for you over time will allow you to plan ahead and make prudent financial decisions. In this edition we will address some of the considerations needed when you want to bring money from the US into the UK. Typically, in your first seven

16 July 2015

tax years living in the UK, you are subject to UK income tax on your UK earnings and any offshore earnings that you bring into the UK. This is known as Remittance Basis taxation. Under the remittance basis you will not pay UK tax on your foreign income and gains if they’re less than £2,000 in the tax year and you don’t bring them into the UK (for example, transfer them into a UK bank account). If you have foreign income and gains of £2,000 or more, or you bring any money to the UK, you should file a UK selfassessment tax return and either pay UK tax or claim the remittance basis. Claiming the remittance basis means that you only pay UK tax on the income or gains you bring to the UK but you lose some potentially valuable allowances such as the income tax allowance and capital gains tax allowance.

By Andrea Solana In addition to transferring money into a UK bank account, there are a number of other ways one can be deemed to remit money such as: • Receiving a service in the UK and paying for the service using the income or gains that arose outside of the US. • Purchasing an asset in the UK and paying for it using foreign income or gains. • Purchasing an asset overseas using foreign income or gains, and then bringing that asset into the UK, unless it meets an exemption. • Creating a UK debt and then paying that off using foreign income. • Giving money to a relevant person who then uses the money to buy goods or services in the

The American July 2015 Issue 745  

The leading cross-media publication for Americans in the UK - and anyone interested in American culture

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