UK IFA

I thought I remembered something it may not apply anymore.

This was from Nat West a couple of years ago.

'With effect from 26th March 2004, the Australian Corporation Compliance Act 2001 prohibits foreign financial Institutions, i.e. those located outside of Australia and it's territories, to open new accounts or other financial products for Australian residents. The RBSG are therefore restricted from making available any new financial products whilst a new or existing customer is resident in Australia and it's territories'.

Therefore under this Act all lenders based outside of Australia are prohibited from granting a mortgage whilst clients are resident in Australia.

dunroving

But taking out a mortgage isn't the same as purchasing a property.

Panhandle

By what authority does the Australian Act have in another sovereign country?

The world of banking is not controlled by the Australian government. An acquaintance of mine recently bought an apartment in Thailand, with a loan from an Australian bank, he lives and works in Australia.

redbean

Hi

Sorry if I had confused the issue but what I had meant to say is that the bank in Sydney has pre-approved a loan of say AUD300,000 (using her flat in Sydney as collateral). Now this bank knows that the intention of this pre-approved loan is for my daughter to buy a property in the UK.

The sticking point (according to KPMG tax expert) is how the UK taxation office treats money brought into the UK........she was informed that the sum of money brought over to the UK must be done before she arrives in London otherwise it will be treated as an income. This income will be taxed.

So, if her salary is XX GBP. At the end of the UK financial year (which is April 2013), the UK tax office will tax her as if she has an income of say 200,000GBP (after conversion) + xxGBP. Does the above makes sense?

dunroving

A mortgage isn't earned income it's a loan.

redbean

Another thing that confuses us, is that to buy a property in the UK (so we were informed by British colleagues of daughter) you must go to a mortgage broker to secure a loan. And, this seems to be backed by this article which I have found:
http://www.guardian.co.uk/money/2007...irsttimebuyers

Why a mortgage broker, why not go to the bank in the UK directly to secure a loan? Now the reason she needs to secure another loan from the UK mortgage broker or bank is that the amount her bank (in Sydney) is willing to lend her may not be sufficient to purchase a one bedroom flat in London.

So, my question should be read as how do you go about borrowing an additional, say 50,000GBP from a bank in the UK to supplement the amount she already had (in principle)?

The more critical question is (based on your experience) how do you transfer a sum of money over to the UK without the UK tax office treating it as an income?

redbean

Well! that's what we thought but not according to the UK tax office. Perhaps the UK tax office worry about money laundering but we can prove that the money obtained is from a loan by an Australian bank.

UK IFA

I have sent you a private message.

dunroving

Evading tax on earned income and laundering money are two different things - the tax office doesn't tax laundered money, you get arrested for money laundering.

It seems we are going around in circles. Several people have now told you that money brought in is not taxed as earned income, but you insist this is what the tax office says. Maybe you should get back in touch with the tax office, or find where on their Web site it says this as I think it is just plain wrong. There's no point us going over the same ground.

In reference to your other question, you don't have to use a mortgage broker, it's just a lot easier because your situation is more complicated. I would find a mortgage broker for yourself - be wary of people sending you unsolicited offers of help.

Pistolpete2

This was hurting my head because I might return to the UK with capital so I decided to try and find a decent answer. Only really relevant where we are talking fairly big bucks, I think, as it is complicated and needs advice.

OP, you did not say whether your daughter was going to become ordinarily resident or domiciled but KPMG were probably looking at this from a cautious viewpoint which is that there would be remittance to the UK while your daughter was resident in the UK for tax purposes, even though it was described as savings.

This per another accountancy firm PKF:

Top 10 tax tips for individual expatriates coming to the UK:

3. Close offshore bank accounts and set up new income and capital accounts

"Non-UK domiciled individuals are only taxable in the UK on remittances of offshore income and capital gains arising after they become resident in the UK. It is important to be able to clearly identify these sources, so any offshore accounts should be closed shortly before your arrival in the UK and new income and capital accounts set up. Arrangements should then be put in place so that any interest arising on the capital account should be credited directly to the income account. Remittances to the UK can then be made from the capital account without additional UK tax charges. It is important to take professional advice when setting up the accounts you will need as the rules are complex, and errors can result in unintended tax bills."

My bolding.

The crux is that you should be able to clearly identify capital and income separately, crediting new income from capital to income or HMRC might feel inclined to tax the lot. Also, by clearly identifying CAPITAL rather than co-mingled assets which could have been derived in part from UK taxable income, you are then free to introduce it to the UK without fear of tax, even after you have arrived.

dunroving

When I came back in 2006 I had a sum of money to bring back with me (not huge, but not a couple of k, either - in the low five figures).

Shortly after arriving an an IFA offered to give me advice on getting a mortgage.

For one thing, his advice on mortgages was simply rubbish, and focused on maximizing the commission he would receive. I won't go into the details but if I had listened to him, I'd have been mighty sorry when the crap hit the fan in 2007/2008. Essentially I'd have been stuck at the end of a short-term fixed rate, unable to remortgage except on a silly rate (as it was, I found myself a lifetime tracker at BOE +0.59% - so am currently just paying 1.09% interest).

But more worryingly, he kept harping on about me having to pay tax on the money I had brought back with me. I found this hard to believe - it was my money, saved over the years. Turned out he was referring to tax on interest accrued on the money after I had brought it back - but this would have been true of interest accrued if I had left it in the US! Income is income. He was talking in riddles, just spouting stuff he had obviously learned from some cheap training course or from reading a book. I think he said he used to be a window cleaner before he got into personal finance.

With the availability of good information from reputable sites on the internet, (a) most of us are smart enough to find the right information for ourselves, and (b) anyone can pass themselves off as a financial advisor just by Googling a few facts and figures. I wouldn't pay an IFA a penny - I've used them twice and might as well have flushed my money down the toilet.

Pistolpete2

Yep, those IFA people would think it fine if you paid them £100 to avoid paying £10 in tax on some piffling interest.

Unfortunately it's in their interest (excuse!) to make it sound as confusing or unreasonable as possible but moving large chunks of capital around contaminated by a small element of interest or other income could, maybe, attract attention what with HMRC having access to all bank records these days and doing their jobsworth stuff. Then you would have to provide good evidence to keep them at bay if you are a fairly big fish and that would be a pain.

It is fairly clear to see the advantages of locking away the capital bit the moment before you head to the UK so that you can then easily provide paperwork to support the number when needed and show drawings from same which are not taxable when remitted to the UK.

I'm not sure I necessarily agree with you ref research through googling, particularly regarding tax. Sometimes you have to know what you are looking for, particularly regarding the basis for tax, residence, domicile and remittances so a greenhorn would get lost real fast and use something which turned out to be only half-right which is nowhere. Google is not going to bring up extra-statutory concessions and split-year treatment for you unless you are very close in your search line. What is more, as you yourself stated a while back as I recall, these rules and regulations change on a fairly regular basis and you could end up with something which has just been superceded or is a planned change for implementation soon, particularly regarding non-doms and the remittance basis.

However, I just don't think that BE is a good forum for giving tax advice as the Access to the NHS-based thread clearly demonstrated. If only because we very rarely get the full story to work with and being under no real obligation we might tend not to spell it all out in the necessary detail for fear of creating confusion and then fall short anyway.

dunroving

I completely agree with you re: sorting out complex tax situations via Google - I was really just saying that for most personal finance issues, the Moneysavingexpert site and other Web sources can tell you a lot more than many so called financial advisors.

I paid an accountant last year to advise me on whether I could submit tax returns for the past 5 years, as I am always spending my own money on professional expenses (conferences, etc.). He met with me for an hour, communicated via email, filled in and submitted my forms for me, charged me about £150 and I got a refund of £2,000. Now that is what I call good financial advice.

spouse of scouse

Another thread that is absolutely invalubable, thanks to all contributers. As an Australian citizen married to a UK and Aus citizen (he was born in the UK and also has obtained Aus cit - I don't mean I have two husbands) I know that our biggest headache for our move back to hubby's home is the tax stuff. Main income will be interest earned from investing money from the sale of our home here, but there will also be interest from a bit of superannuation (tax free here but not in UK), and we have an investment property here that still has a mortgage that the rent covers, plus hubby's eligible for a part UK basic state pension - it will all only add up to a modest income so it's vital that we get or right or we'll be stuffed. Although I've learned a lot from BE and Mr Google the complications of our situation seem endless and we'll need a good financial advisor, or tax agent, or accountant, any of which will have to be well versed in Aus and UK tax law.

The only trouble will be finding such a beast

spouse of scouse

ooooer, I've just invented a new word! Invalubable!