Tax advice of the week: Transfer to a foreign bank account
January 18th, 2012From 6 April this year, capital gains from foreign currency bank accounts will be tax free, says Nick Braun in Business Tax Saver. It’s good news for those who are non-domiciled, or who often keep cash in offshore bank accounts. It may also “create a new tax-free investment opportunity for all UK individual taxpayers” (though not for companies).
Say you transfer £100,000 into a US dollar account. The dollar strengthens, so that your investment is worth £115,000. If you cash it in after 5 April, the £15,000 gain will be tax free. Cash it in beforehand, and it is taxable.
If you own a foreign property that you have been renting out, you may benefit too. Until now, if rental income is accumulated in foreign currency over a number of years, it has been viewed “as a long-term investment and subject to capital-gains tax”.
As of 5 April, it will be tax free. The flip side is you will not be able to offset capital losses from foreign currency accounts against gains from other asset sales, so you may want to withdraw the funds before the end of the tax year to lock in your losses.
Tags: Account, Bank Account