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Home » News & Insights » Taxation of Offshore Bank Interest

Taxation of Offshore Bank Interest

Posted on 26th November 2018

Avanti has many clients that are working in the UK but are from other countries. In some circumstances the tax on their income is affected by the country of origin.

One Avanti client came to the UK when she began working here in autumn 2002. She was born with Spanish domicile and intends to retire to Barcelona where she grew up.

When she moved to the UK, she continued to keep a modest amount of savings in a deposit account in Spain. As she has sufficient income from her work as a Carer in the UK, she doesn’t normally draw on the offshore bank account.

Now that it is time to prepare a Self-Assessment Tax Return for 2017/18, the question has arisen of how the taxing of the offshore interest has been affected by the rules to deem people to have UK domicile being extended to Income Tax and Capital Gains Tax.

Our client will be deemed to be UK domiciled for the year 2017/18 because she has been UK resident for 15 of the 20 years immediately preceding it.

This means that she is not able to make a claim to use the remittance basis in 2017/18. However, it is worth noting that this deeming rule is not the end of applying the remittance basis to offshore income and gains in all circumstances.

Our client can’t make a claim to the remittance basis this year. However, if her unremitted offshore income and gains for 2017/18 doesn’t exceed £2,000, then the remittance basis applies to those income and gains without a need for our client to make a claim and this treatment is unaffected by her deemed domicile. In those circumstances, we just need to include additional Residence Pages in her return and ensure that the correct box has been ticked.

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Disclaimer:- The information contained herein is given by way of general guidance only and no action should be taken solely on the basis of the information contained herein. The Avanti Group (UK) Ltd will be pleased to provide further guidance on the issues, and how they might affect you. No liability is accepted by the firm for any action taken without seeking appropriate professional advice

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