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Forex tax implications of return to UK


troy79

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Hi All

First Post.

We migrated to Oz in 2007, now for various reasons we have decided to return to UK, possibly permanently - maybe just for a few years. My question is; I brought all my money here in 2007 at $2.50 to the pound and stand to make quite a big foreign exchange profit when I transfer the money back at $1.50. All well and good but will the uk taxman be entitled to any of it.

Regards

Troy79

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  • 2 weeks later...

Hi Troy79

 

Please don't accept this as tax advice, but in terms of Australian dollars you have made no gain at all.

 

And since you have been resident in Australia for tax purposes during the period over which the exchange rate has moved, it is right to consider your assets in terms of Australian dollars and not in any other currency (ie. no gain).

 

Further, during the same period, any gains you have made in terms of British Pounds are not taxable by HM Revenue and Customs (UK). This is because you have not been resident in the UK over that period.

 

This assumes of course, that your tax residency has been clear cut, and there is no question for example of dual tax residency.

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I am in the same position aand have been worrying about this. Could you tell me where you got the reassuring advice? My thought was that the event which may generate a CGT liability only occurs when you actually make the transfer. It's not an on-going thing during the years of residency in OZ. Therefore I thought it might matter whether you transfer the money back to sterling before or after leaving Australia, or it might even matter if it's in the same UK tax year as you eventually take up residency there. Any thoughts on these points?

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I am in the same position aand have been worrying about this. Could you tell me where you got the reassuring advice? My thought was that the event which may generate a CGT liability only occurs when you actually make the transfer. It's not an on-going thing during the years of residency in OZ. Therefore I thought it might matter whether you transfer the money back to sterling before or after leaving Australia, or it might even matter if it's in the same UK tax year as you eventually take up residency there. Any thoughts on these points?

 

The advice was from an accountant who is a friend of a relative. His advice was specific to my circumstances, all my assets are in cash and will be moved back to the Uk before I return. He did mention that if you have CGT assets bought in Aus and then sell them when you have moved back to UK (and become UK tax resident) you may be liable for UK capital gains, but he was refering to shares/bonds rather than the currency itself. I think Jorgons' post above describes the currency aspect clearly. Hope this helps, but best to get specific advice for your own circumstances.

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HGT

One more thing that I forgot to mention. Before I received advice from the accountant friend I also found something on the HMRC website.

[h=2]Exempt assets - when you don't pay Capital Gains Tax[/h] Some assets aren't liable to Capital Gains Tax at all because they’re exempt. These include:

 

 

  • your car
  • personal possessions worth up to £6,000 each, such as jewellery, paintings or antiques
  • stocks and shares you hold in tax-free investment savings accounts, such as ISAs and PEPs
  • UK Government or 'gilt-edged' securities, for example, National Savings Certificates, Premium Bonds and loan stock issued by the Treasury
  • betting, lottery or pools winnings
  • personal injury compensation
  • foreign currency you bought for your own or your family's personal use outside the UK

 

Not sure that the last one is meant to relate to the circumstances we are discussing but it can be read that way 'if you want to'

Regards

Troy

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