NRA Capital Gains Tax in UK

Anyone know how HMRC treat capital gains on sale of mutual funds held in US brokerage account? Purchase was made before returning to UK.

Anyone know how HMRC treat capital gains on sale of mutual funds held in US brokerage account? Purchase was made before returning to UK.

Assuming that you are tax resident in the UK -

Mutual funds are not usually HMRC reporting funds so I am not sure how they will be treated. Possibly the income from the sale of mutual funds will be treated as regular income, but at best they will be treated like reporting funds.

I have sold shares from ETF shares held in a US brokerage account that is a reporting fund and hence recognized by HMRC as such. The process was to know the cost of the shares in £s when purchased in the USA using the exchange rate on the date of the purchase and the value of the sale in £s on the date of the sale. The capital gain is then subject to HMRC capital gains tax.

XE.com holds historical data on exchange rates so the conversions of $ to £ is easy to find.

assuming (most likely) they are non-reporting funds, chargeable to UK income tax as offshore income gains (using the special OIG share identification rules).

assuming (most likely) they are non-reporting funds, chargeable to UK income tax as offshore income gains (using the special OIG share identification rules).

Excellent, I wasn't sure how they were treated.

To the OP -
If your mutual funds have ETF equivalents that are HMRC reporting then you maybe can convert the mutual funds to ETF's with no tax consequences in either country.  This is what I did prior to moving back to the UK.

Thanks. These are Vanguard funds so I can exchange them to ETF as a non taxable event and take advantage of the uk capital gains allowance

Your input is much appreciated.

Thanks. These are Vanguard funds so I can exchange them to ETF as a non taxable event and take advantage of the uk capital gains allowance

Your input is much appreciated.

Excellent. The mutual funds I converted to ETF’s were also Vanguard so you should be in good shape.

UKradya, you are already UK resident and so the UK tax analysis of swapping a holding in a non reporting fund to a similar reporting fund should take account of the following.

The details of the UK tax rules on offshore funds is set out in a statutory instrument, Offshore Funds (Tax) Regulations 2009.

Reg 4 makes it clear that you need to separately consider each class of interests in a fund.

There is a general capital gains exemption, within TCGA 1992 s127, for what might be termed “paper for paper” swap of interests. Reg 37 disapplies this exemption. Instead a swap of interests will be treated as a disposal of the original holding at market value and an acquisition of the new holding at that value.

The above means that the course of action that you might be considering could trigger a charge to UK income tax under the OIG rules.

It is not relevant for these purposes that your original acquisition was made during a period when you were not resident in the UK. Further the original acquisition cost is used for this purpose (as calculated in sterling); there is no rebasing to market value on becoming a UK resident.

Thanks Dunedin. I am in fact still resident in US and planning my future repatriation. If I was to exchange to ETF whilst still US resident would that provide a remedy?

Thanks Dunedin. I am in fact still resident in US and planning my future repatriation. If I was to exchange to ETF whilst still US resident would that provide a remedy?

Yes, this is what I did.

While you are not subject to UK taxes then this is the time to do it.

Cheers durhamlad. Did you relocate to Durham?

Cheers durhamlad. Did you relocate to Durham?

I’m from County Durham but relocated a short distance south,  to North Yorkshire, to a market town we grew to love in the 6 years we lived there in the late 70’s early 80’s. A couple of days ago we were sat outside a cafe here eating breakfast with our son, who relocated back here from Texas last year. My wife said to him, “Did you ever imagine being here sitting opposite the church you were baptized in, and where your 9 greats grandfather was married in 1646?”. (He was only aged 5 when we moved to Texas and is in his 30’s now)

Remarkable.

I'm actually considering north Yorkshire or Cumbria on either coast.

25 years here and I miss my home sod. Need to get back soon

We live a few miles inland but spend lots of time on the N York’s coast, some of the highest sea cliffs in the country, beautiful beaches and quirky seaside towns and villages.

I am a UKC/USC and have been resident in UK for over 40 years.  I have no US assets.  How can I access US ETFs which are registered in the UK?  I contacted Vanguard and they will not sell to me.  Any suggestions/solutions?