J.J

Hello,
Here's where I am coming from; if I am UK resident and sell my primary residence in UK and the gains are free of tax, then do I enter this income on my Tax Return and somehow qualify that no tax is due - or do I just not enter it on my Return?

Similarly, do I have to declare my ISA withdrawals on a Tax Return ?

And then to a USA Roth IRA, for which withdrawals are free of tax in USA and also free of tax in UK per the Tax Treaty; would I, as UK resident + domiciled, report a Roth IRA withdrawal on my UK Return and somehow qualify that it should not be included in my total income for taxation - or do I just legally not report it ?

Thanks

ozhappy981

Yes, if you are a UK resident and you sell your primary residence in the UK, any gain is tax-free. You do not enter it into your UK tax return at all.

Bijilo123

It is not as simple as this and it does not help that you are claiming UK residence and saying that you are in the US.

I think you need to consider if you are 'ordinarily resident' which differs from your residence status. Establishing that determines treatment of assets moving between US and UK.

If you are back in the UK and have assets abroad then you should very quickly get in touch with the Revenue in the UK and let them know.

If you live in the UK no need to declare capital gain on your principal residence - ie the house you live in. You don't need to declare liquidating an ISA.

You must declare to Customs amounts of money you bring in or out of the Euro Zone.

Here is HMRC6 which explains the UK Revenue position. I don't know what goes on in the states other than the principle that they tax world wide earnings but take into account dual tax agreements.

http://www.hmrc.gov.uk/cnr/hmrc6.pdf

Bijilo123

JJ your posting in the welcome inn describes a different set of circumstances than you describe here.

It seems to me that your house in the UK is not a principal residence because you don't live here because you say in the Wellcome Inn that you live in the USA. For your house in the UK to be your principle residence then you will need to live in it. I assume in your many years in the US that you have left the house empty and there are thus no issues of rental income for tax in the UK. Actually if you have been away for a long time and bought the house before you left then the capital gain may not be too much due to indexing.

If you have had isas in the UK but not lived in the UK then you have to pay tax on the gain/interest.

You describe safeguarduing assets - they are safe if the investment has come out of taxed income.

I sense a small inconsistency in the way you describe things - which is fine for a site like this - but you really need to be careful with the UK Revenue who are a bit more clever and perceptive than me.

Best wishes to you.

ozhappy981

I thought the OP was a US citizen living in the UK.

Bijilo123

I thought he was a UK citizen living here too until I read in The Wellcome Inn post - 'Hi this is JJ from NC..'

J.J

Scuse me for being obtuse and confusing in my original post of anticipating a future situation, please allow me to clarify;


At this time; We are dual USC and UKC, resident and living in USA and filing properly in the USA. Our principal residence is in the USA which we will sell before we leave the USA. We have retirement savings accounts in the USA known as Roth IRA and these are free of tax upon withdrawal, along the same lines as UK ISA's and if / when we move outside the USA these 'Roth's' could be legally left behind in the USA to grow tax-free.

In the future we shall repatriate and become resident in UK (without surrendering our USC). This means we will properly file tax returns to HMRC (and to IRS in the USA as a USC) declaring world wide income to both but being covered by the UK/USA Tax Treaty to be excused certain double taxation on the same income - but that is by the by and not central to my question.

So what the heck am I trying to post in the first instance ??
(Note that I have never before completed a UK self assessment tax return, they didn't exist when I moved out of UK)
I was trying to anticipate that when we are future resident in the UK, how would I properly report (on UK Tax Return) a withdrawal from this tax-free Roth left behind in the USA ? Would I report it on my foreign income and somehow comment that it is free of tax and doesn't need to be counted in, or would I just not legally report it because it is not taxable income. (It is tax free in UK as it would be in the USA because of the Tax Treaty)

So, here's my mid-Atlantic logic - people on this board that haven't lived in USA would understandably not be familiar with a 'Roth IRA' and so to explain that, I drew similarities of a) tax free sale of principle residence in UK (as a UK resident) and b) tax free sale of a UK ISA (as a UK resident). So these were meant to be 'appetizers' to set the scene for my question of reporting my US Roth income on a UK Tax Return .
It seems though that my intent to clarify caused more confusion than intended and so I'll attempt to do better next time.

There is no intent to be underhand or sly or inconsistant or avoid my due taxation for I believe that if I benefit from services that (both) governments provide then they are justified in asking me to pay my share through taxation. In fact it's the reverse, I am attempting to fully understand the situation so that I CAN properly file my dues.

Anyways, I got the answer, thanks to ozhappy981 and Bijilo123 indicating to my examples that a tax free liquidation of a (anyone's, not necessarily mine) UK principle residence (if the owner is UK resident) and liquidation of a UK ISA (if the owner is UK resident) are simply not reported on a UK tax return.Then one must assume that any other tax-free income (ie Roth IRA) is simply not reported.

Huh?? So why am I looking ahead to a fence (i.e my pending move to the UK) I have not reached yet ? Well, preparation is the key word,for I don't want to stumble as I reach the fence or fall into as big hole on the other side of the fence once I have irreversably jumped it. Just like (another example) taking out life insurance or saving for college, it is in anticipation for the future.

If you got this far in my message, thanks for reading this long winded rambling but I hope it helped clear up the confusion I apparantly caused - and maybe it will be of use to someone.

Bijilo123

Why are you coming to the UK? Is it something to do with free medical treatment?

J.J

@Bijilo123, no, not medical particularly, we are both fit and healthy. You could as well ask why did we come to US in the first place; it wasn't that we were running away from UK, no reason to, in fact we had a great life there, and came away when the opportunity arose for an adventure elsewhere. If the opportunity abroad had not come to us we maybe would never have left.
You could ask why anyone goes anywhere, it's usually a complex collection of facts and emotions.