Tax advice - treatment of money left in the UK
 

Hi all, I've been living and working in the UK for a few years and have built up a small savings fund over the years. I'm currently considering moving back to Australia but would like to leave the majority of my savings invested in the UK when I return. Mostly because the exchange rate is so miserable at the moment and I don't think I'll have much need for the money soon after returning. (Yes, I know the exchange rate may not improve anytime soon, but still...)

I understand that any profits I make from the investment would be considered capital gains taxable in Australia when I eventually sell out and move the money overseas, however, my question is, if the exchange rate was to recover somewhat in that time, would the increase in (AUD) value of the money become taxable too?

ie. If I was moving today and invested £1,000 ($1,620 - AUD/GBP 0.616). In 10 years time say that grew 7% annually and the value of the GBP increased to AUD/GBP 0.5 so the investment is now worth £1,967 ($3,934). Am I taxed purely on the investment capital gain of £967 or on the AUD capital gain of $2,314?

Hope that's clear. Thanks in advance for any assistance!

Re: Tax advice - treatment of money left in the UK
 

It is a bit of a grey area but I have been advised that it is unlikely that any currency gain would be taxed or allowed as a loss even. These are personal already taxed funds and you are not playing the currency market as such so even if it is picked up you could still be exempt. Now if you bought pounds to attempt to make money on exchange rates that is different, as would be regular currency transfers for gain.

The main issue you will face is investing or moving the money once you are no longer resident. We cannot move savings accounts for better interest and even trading shares can be problematic! We have managed to invest some of our funds in peer to peer but only a few will allow non UK residents to invest and you still need a UK current account to do so.

Seems that the nets to catch the big fish catch all the tiddlers but still allow the big ones to find the gaps! How can I possibly be money launderering by moving funds within the same bank that have been there for years, yet millions of pounds of dodgy cash seem to have slipped through without any issue.

Re: Tax advice - treatment of money left in the UK
 

Thanks Rammygirl.

I was planning to just leave it all in my S&S ISA rather than try and move it around. As hands off as possible. Shame the ISA wrapper means nothing to the Aussie government though.

Re: Tax advice - treatment of money left in the UK
 

As a non resident of the UK, I don't believe you can retain your ISA.

Re: Tax advice - treatment of money left in the UK
 

I was under the impression that I could retain it but no longer contribute to it. Not sure though. I'll look into it...

Re: Tax advice - treatment of money left in the UK
 

That is my understanding as well.

Once you become tax resident in Oz you would have to value all your investments in OZ$ using the exchange rate of the day. When you sell these investments you would again have to value them in OZ$ using the exchange rate when sold and any CGT would be based on these 2 values.

BUT ISA's are a special case as they are tax free and so I believe the Oz taxman considers them income and you have to declare the gain each year and be taxed accordingly.

Re: Tax advice - treatment of money left in the UK
 

Also being an ISA , you may not get the kind of statements that make it easy to report tax on. Also the gain may be assessed using the original purchase date, not the date you left the UK.

Re: Tax advice - treatment of money left in the UK
 

I think you might be right.

Anyhow, a bit more info and investment, and tax advice here.

https://www.ft.com/content/905235da-a189-11e0-baa8-00144feabdc0

Re: Tax advice - treatment of money left in the UK
 

The ATO will look at it purely in AUD terms.

You invested $1,620 and sold for $3,934...

On the subject of money left in the UK, and Australian tax. Premium Bond winnings are tax free in UK, but taxable in Australia.