moving money from US to UK for house deposit

I've heard vague noises that if we move some of our US money to the UK (in anticipation of using it for a house downpayment) that we will incur some tax liability - or that there's some limit on how much we can move.  I know all about money laundering requirements and I'm not worried about that - but is there something else we should know?  Are there tax consequences? thanks in advance for the help.

1. You are taxable by the United States on worldwide income & gains.

2. Records of larger amounts of money in the UK would need to be kept so you can list the exact amount on the 2009 Form TD F 90-22.1.

3. The UK will charge you tax on worldwide income & gains unless you claim the remitttance basis.  If you claim the remittance basis you will lose the UK personal allowance & annual CGT exemption. (Once you have been here for 7 years you would also have to pay the £30,000 charge to claim the remittance basis.)

4. Whether or not you claim the remittance basis, any remittance to the UK from a mixed fund would typically include income or gains that will become taxable when remitted to the UK.

5. Because of the recent fall in sterling, you will almost certainly also realise a taxable foreign currency gain.

6. If you become taxable by the UK there may be an argument under the double tax treaty to resource US source income and gains as foreign on your US return so that the US gives credit for UK tax payable so you do not get taxed twice.

7. If you buy a house & your spouse is not a US citizen you will need to consider US gift tax implications on moving monies, plus which spouse would best own the property & in what proportions taking into account both US & UK tax rules.

Wow.  Thanks.  I think I understood most of that but I got enough to know that a visit to our tax guy is in order.

Regarding point(3), if you kept "principal" and "income" seperate in the US, you could remit just the principal part and not have to pay tax ?!

Guya, are you sure about (5) ? I have met with 3 different tax attorneys in London so far, and none of them even so much as mentioned the exchange rate advantage being treated as a gain. This is money that is coming from US to UK for the first time (not money that was in pound sterling in the UK, got converted to US $ and then bringing it back, in which case I can understand ...)

Regarding point(3), if you kept "principal" and "income" seperate in the US, you could remit just the principal part and not have to pay tax ?!

Guya, are you sure about (5) ? I have met with 3 different tax attorneys in London so far, and none of them even so much as mentioned the exchange rate advantage being treated as a gain. This is money that is coming from US to UK for the first time (not money that was in pound sterling in the UK, got converted to US $ and then bringing it back, in which case I can understand ...)

In practice it is very, very rare for a US bank to be able to keep income & capital separate so this is moot.

I would refer you back to your attorney to get a written opinion on foreign currency matters.