UK bank account - tax on interest
I am living in the US but still have my UK bank account which is earning interest. The interest is being taxed - I think I might be able to reclaim that as I am not earning over the 4K or whatever that you can earn in the UK without paying tax. But I am confused about what I am supposed to be doing. Should I be paying tax in the UK? Or should I be declaring this in the US?? (How can they know about it?) Should I have an offshore account instead? Is there anyone out there who understands all this? :confused:
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Re: UK bank account - tax on interest
Originally Posted by sid_s
I am living in the US but still have my UK bank account which is earning interest. The interest is being taxed - I think I might be able to reclaim that as I am not earning over the 4K or whatever that you can earn in the UK without paying tax. But I am confused about what I am supposed to be doing. Should I be paying tax in the UK? Or should I be declaring this in the US?? (How can they know about it?) Should I have an offshore account instead? Is there anyone out there who understands all this? :confused:
(but I'm replying anyway) Here's my take on it. The 4K threshold is for income tax. Not capital gains which is what we are talking here, so it is taxable. You should also declare it to the IRS, but it isn't taxable as taxes have been paid to HRH the Queen. best bet get an offshore account and declare it as capital gains to the IRS. but again I could be WAY off the mark here. |
Re: UK bank account - tax on interest
you can ask for interest to be paid gross (i.e. no tax)
then you can declare it to the IRS the inland revenue has information sharing agreements with countries they have tax treaties with |
Re: UK bank account - tax on interest
Originally Posted by BritGuyTN
you can ask for interest to be paid gross (i.e. no tax)
h Depends how much it is and how much you'd save. I'm guessing they are taxking it at basic rate tax anyway in UK which typically, unless your in Florida it would be a real close call.... Do some quick numbers and see based upon your US tax rate. Good luck. |
Re: UK bank account - tax on interest
Originally Posted by franc111s
I tried that and gave after after 2 refusals from the Inland Revenue. Since you will be taxed somewhere on it, the difference wasn't worth the hassle. It wasn't a lot and I offset that in the USA so I didn't pay twice.
Depends how much it is and how much you'd save. I'm guessing they are taxking it at basic rate tax anyway in UK which typically, unless your in Florida it would be a real close call.... Do some quick numbers and see based upon your US tax rate. Good luck. It sounds from what you are all saying that I can basically choose whether to pay tax on it in the UK or the US? |
Re: UK bank account - tax on interest
Originally Posted by Manc
I AM BY NO MEANS AN EXPERT.
(but I'm replying anyway) |
Re: UK bank account - tax on interest
Originally Posted by Ray
Same her but take it out of the bank into a building society account ..file form R85 and the interest will be paid gross....
Sadly, you shop around for the best deal ... deposit your money ... and then a month later the best deal is somewhere else. There are ways to lure you in with your hard earned cash ... and just as many ways to make sure that the interest offered will decrease not long after they have your cash. Best bet is to deposit money with a B/S or bank which has a known track record for not messing around when it comes to deposit interest rates ... as once you are no longer resident in the UK you won't be able to shop around and transfer your money to another B/S or bank in the UK (unless you open several accounts just prior to leaving, as I did!). Just before I left the UK I checked out all the deposit rates on offer ... and the banks were offering pretty much the same deals as the big B/S's. The main exceptions are with the smaller B/S's .. they may well be worth checking out. |
Re: UK bank account - tax on interest
Oooops ... OP has already left the UK ... so he can't open any new accounts anyway ... sorry ... Must read thread properly before replying in future! ;)
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Re: UK bank account - tax on interest
Originally Posted by Guelder Rose
Oooops ... OP has already left the UK ... so he can't open any new accounts anyway ... sorry ... Must read thread properly before replying in future! ;)
Thinking about it, it's a good time to bring UK cash back to the USA at $1.90 - ALthough interest rates are higher in the UK, the 30% growth on the exchange rate in the last 2 years outstrips anything I've seen..... Also, as an individual tax payer - the IRS cannot easily calculate the profit you make on an exchange - talk to your accountant though first :) :) :) |
Using Turbotax or other computer tax software
Originally Posted by sid_s
I am living in the US but still have my UK bank account which is earning interest. The interest is being taxed - I think I might be able to reclaim that as I am not earning over the 4K or whatever that you can earn in the UK without paying tax. But I am confused about what I am supposed to be doing. Should I be paying tax in the UK? Or should I be declaring this in the US?? (How can they know about it?) Should I have an offshore account instead? Is there anyone out there who understands all this? :confused:
http://www.turbotax.com/tax_products...t_premier.html The IRS will obviously want to know: Name of financial institution location of financial institution your account number for each of your foreign bank accounts |
Re: UK bank account - tax on interest
What interest I get monthly I note on a spread sheet. I do this with my UK Pension also as I pay all my taxable earnings to the IRS. My pension is paid in every 4 weeks(in $'s) at the exchange rate applicable at the time. I record this on a spread sheet and take the average exchange rate for the year, of my pension and apply that to the Bank interest I have earned. Both spread sheets are presented to our accountant for IRS taxes.
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Re: UK bank account - tax on interest
Originally Posted by Guelder Rose
Oooops ... OP has already left the UK ... so he can't open any new accounts anyway ... sorry ... Must read thread properly before replying in future! ;)
I thought about opeining an offshore account but they seem to pay less interest and have some charges so I didn't bother. |
Re: UK bank account - tax on interest
I kept all my accounts open - interest in classed as income not capital gains so should fall under the 4800 or so zero rated allowance. So if you write to the revenue they should give you a refund (depending on your circumstances) you should also declare here as your worldwide income is taxable (subject to double taxation rules etc) but at the end of the day would they ever know? Also i don't know how much money is involved but is it worth the hassle for you?
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Re: UK bank account - tax on interest
I opened an account with Citibank in the UK and they pay my interest tax free and send me my bank statements etc to my USA address. I then declare the interest on my US tax return.
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Re: UK bank account - tax on interest
Having just done a module in my degree on Tax (UK) - i beleive you only pay tax where you domicile which in your case would be america so you definately shouldn't have to pay tax in this country, however like it has been mentioned you should declare it to the IRS (probably under overseas investment or something similar.
Like you said the bank can and in some cases will say that they will close your account if you do not live here anymore although really there is no reason they should but seeing as egg are internet that may be why, although it does suprise me they are normally pretty open and only internet based. Did they say they definately would close the account. Although it is a good savings account i'm sure, if they will not keep it open why don't you bring it over to the US, with the current good exchange rate and it unlikely to get too much better now would be an ideal time to bring your money over. Hope some of this is useful to you. |
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