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On the sexy topic of tax returns, when should I file a UK one?

On the sexy topic of tax returns, when should I file a UK one?

Old Mar 13th 2018, 2:02 am
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Default On the sexy topic of tax returns, when should I file a UK one?

Hi All

Sorry to start a completely boring thread about tax but I am really confused on this! Couldn't find an up to date thread so here goes....

We moved to NJ in October 2017. Filed numerous W8-BEN forms for them to be rejected so I've now done a W9 form.

We own a house which is rented in the UK since October 2017 - we make very little on this after mortgage. The only other UK assets is a few savings accounts (including ISAs) earning interest under £1k per year.
I filed a Non-resident landlord form before we left.

I had used HMRC's calculator to work out when a tax return was due and it came back with October 2018 so I left it alone. Now I'm concerned we may need to file one. I worked in the UK until September 2017.

Any advice (or a decent UK tax expert referral) would be super gratefully received! We have a US tax expert but nothing for the UK!

Thank you in advance
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Old Mar 13th 2018, 2:14 am
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Default Re: On the sexy topic of tax returns, when should I file a UK one?

I hope that your US tax expert has told you to get shot of your ISAs - they create an unholy mess of tax paperwork in the US and in any case are totally ineffective for tax purposes in the US.
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Old Mar 13th 2018, 7:30 am
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Default Re: On the sexy topic of tax returns, when should I file a UK one?

Originally Posted by JosiesJourney View Post
Hi All

Sorry to start a completely boring thread about tax but I am really confused on this! Couldn't find an up to date thread so here goes....

We moved to NJ in October 2017. Filed numerous W8-BEN forms for them to be rejected so I've now done a W9 form.

We own a house which is rented in the UK since October 2017 - we make very little on this after mortgage. The only other UK assets is a few savings accounts (including ISAs) earning interest under £1k per year.
I filed a Non-resident landlord form before we left.

I had used HMRC's calculator to work out when a tax return was due and it came back with October 2018 so I left it alone. Now I'm concerned we may need to file one. I worked in the UK until September 2017.

Any advice (or a decent UK tax expert referral) would be super gratefully received! We have a US tax expert but nothing for the UK!

Thank you in advance
The October 2018 deadline is for filing returns for the 2017/18 UK tax year by POST. For online filing the deadline is January 2019. You will need to file with HMRC for the 2017/18 tax year as you were in the UK and presumably earning. You may have paid too much tax! I assume you filled in a P85 and submitted to HMRC informing them you would be non resident? you will still have to file an annual return so long as own the UK property and receive rental.
I understand any UK tax you pay can be offset against your US taxes and as stated you should consider closing your ISAs as they can cause complications with the US revenue mainly due to the way the two countries view tax free savings accounts. As a non UK resident you cannot add to your ISA anyway.
Oh, as non UK resident you cannot use the standard HMRC online system since you need to include form SA109 - non resident. You have to buy one of the approved HMRC software packages - I use Taxcalc. Of course you can ask HMRC to send you the appropriate forms if filing manually.
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Old Mar 13th 2018, 5:07 pm
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Default Re: On the sexy topic of tax returns, when should I file a UK one?

Thanks - he hasn't yet but it was on my to-do list to cash them and transfer to fidelity or somewhere in the US. They are stock/ shares ISAs but they've done quite well in the 2 years we've had them.
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Old Mar 13th 2018, 5:14 pm
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Default Re: On the sexy topic of tax returns, when should I file a UK one?

Originally Posted by quiltman View Post
The October 2018 deadline is for filing returns for the 2017/18 UK tax year by POST. For online filing the deadline is January 2019. You will need to file with HMRC for the 2017/18 tax year as you were in the UK and presumably earning. You may have paid too much tax! I assume you filled in a P85 and submitted to HMRC informing them you would be non resident? you will still have to file an annual return so long as own the UK property and receive rental.
I understand any UK tax you pay can be offset against your US taxes and as stated you should consider closing your ISAs as they can cause complications with the US revenue mainly due to the way the two countries view tax free savings accounts. As a non UK resident you cannot add to your ISA anyway.
Oh, as non UK resident you cannot use the standard HMRC online system since you need to include form SA109 - non resident. You have to buy one of the approved HMRC software packages - I use Taxcalc. Of course you can ask HMRC to send you the appropriate forms if filing manually.


Thank you so much, really helpful! When you first moved did you hire a tax advisor to produce your tax return for the UK or would you say it was not hugely onerous and complex to do it yourself? I'll look into getting the software too

TIA

Josie
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Old Mar 13th 2018, 5:28 pm
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Default Re: On the sexy topic of tax returns, when should I file a UK one?

Originally Posted by JosiesJourney View Post
Thanks - he hasn't yet but it was on my to-do list to cash them and transfer to fidelity or somewhere in the US. They are stock/ shares ISAs but they've done quite well in the 2 years we've had them.
That may have been an expensive mistake - if you had sold up while in the UK the gains may have been tax free, but now on disposal you will have to disclose the gains and pay US CGT now that you are tax resident in the US.
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Old Mar 13th 2018, 6:57 pm
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Default Re: On the sexy topic of tax returns, when should I file a UK one?

You should advise your ISA company that you have moved to the US. They may send your the appropriate tax filing forms such as 1099. Pulaski is right that you will need to pay CGT on all of the gains since inception.

FTax is slightly cheaper at £18 , if you are feeling cheap. I think taxcalc is slightly simpler, but neither software is complex for basic tax returns.
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Old Mar 14th 2018, 9:50 pm
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Default Re: On the sexy topic of tax returns, when should I file a UK one?

Originally Posted by Pulaski View Post
That may have been an expensive mistake - if you had sold up while in the UK the gains may have been tax free, but now on disposal you will have to disclose the gains and pay US CGT now that you are tax resident in the US.
Oh no that's rubbish!! But I'm not talking big bucks though - I set up an account each for me and husband in 2016 - the gains are about £2k altogether but a damn sight more than if I'd used a cash ISA. Thanks for the info. The bank have suspended the account so won't allow any re-investment so the funds are just worth their unit price. Will I still pay CGT to the IRS even if I transfer them but do not sell?
Thanks
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Old Mar 14th 2018, 9:59 pm
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Default Re: On the sexy topic of tax returns, when should I file a UK one?

Originally Posted by JosiesJourney View Post
Oh no that's rubbish!! But I'm not talking big bucks though - I set up an account each for me and husband in 2016 - the gains are about £2k altogether but a damn sight more than if I'd used a cash ISA. Thanks for the info. The bank have suspended the account so won't allow any re-investment so the funds are just worth their unit price. Will I still pay CGT to the IRS even if I transfer them but do not sell?
Thanks
Not sure what you mean by "transfer them" .... if you dispose of them by any means that will crystallize a capital gain. If the transaction is not arms length/ at fair market value then the market price must be used instead, but generally speaking you can't transfer fund "units", or shares in an ISA, to another individual, you can only sell them to/through the ISA manager, so I don't think that "transferring" them is viable anyway.

Unfortunately, not only is there the gain on your investments, also anything that you have invested since mid 2016 has also appreciated due to the recovery of sterling since the Brexit vote collapse of sterling. For example £1 invested when the £/$ rate was $1.20 is now worth about $1.40, even if the underlying investment hadn't increased in value at all, and you will have to pay tax on that gain.

Last edited by Pulaski; Mar 14th 2018 at 10:05 pm.
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Old Mar 14th 2018, 10:27 pm
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Default Re: On the sexy topic of tax returns, when should I file a UK one?

Piggybacking on quiltman's excellent informative post...

I have need to file my first UK tax return in 27 years, having generated 'income' in the UK for the first time in that period.

My income is part cashing in a private pension and six months employment (?)

I felt that I had been overtaxed on both counts.

I had a very good call with HMRC support who agreed that I had been overtaxed and advised the following:

If you are going for self assement, use form SA100. Do not use form R43...

See also SA102, SA101, SA109 (paying particular attention to Q16)

All downloadable, tons of reading material.

But you will have until April 6th/7th before these documents get updated - if at all.

HMRC support are good people these days.
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