Large Transfer of $ to UK

I'm in the process of buying a house here in the UK-  since my investments are in the US- i need to sell off a load, transfer to UK for the down payment.  I realize that I will be subject to US capital gain taxes... but in the UK- do I need to declare this as income at all? 

I did'nt..........are you sure that you've got to pay capital gains in the States?......Clinton changed an awful lot of rules on that.....have you checked it out?

i just assumed I'd need to pay capital gains taxes on the sale of investments.  hmmm... let me ask my us account that question.  from memory i think the taxes depend on how long you've held the stock/mutual fund.  i'll post the reply from my accountant.

The UK will charge a remittance tax on the sale of investments remitted to the UK.  If the gains are less than £8,000, you will be under the taxable limit.  If the investments are jointly owned with your spouse (presumably also American and also resident here in the UK), then it's £8,000 each.  The gain for UK tax purposes may be different than the gain for US tax purposes, as you will need to use the exchange rate on the date of purchase and the exchange rate on the date of sale.  This means that some assets that are a loss in the US will be a gain when computed in the UK, and vice versa.  You will be allowed taper relief and other tax reliefs in the UK depending on how long the stock was owned, similar in concept to the lower capital gains rates in the USA.  You will also be allowed to deduct any US tax paid (or due, if not yet paid) on the gains.  Remember, US capital gains will be 15% or less if you've owned the stock for more than a year.
 
You should seek a UK tax expert in remittances to prepare your UK tax returns this year.  You may want to seek him or her out in advance of the transaction to plan exactly which ones to sell to stay under the £8,000 limit.  Other assets you own may be remittable with zero UK tax (or greater UK tax), which should also be considered.

You will have to pay capital gains tax in the US.  If you have held it for more than a year (long-term), you will pay less tax to pay than if you held it for less than a year.  You will need to know your cost basis to calculate how much tax you will have to pay.

i don't do self-assessment here in the UK.  for the tax year for which i transfer in this large sum of $$, will i have to declare that to inland revenue myself?  or will my bank do it for me?   

how much would a UK account be to help me mitigate the cost of this?

i'm getting taxed in the US- why am i being taxed again? 

alrighty then.  did some more digging.  if my father 'gives' me the money (transfers from his bank to my UK bank), will I be liable for any taxes? 

this may be preferable anyways, because it turns out that these investments will be subject to short term capital gains, which is 30% instead of long-term capital gains of 15%. 

so if my dad transfers the money to me in the UK, and then in a few months time when these investments switch from short to long term capital gains, i pay him back in the US. 

brain swelling.

Alright- went to a UK accountant and asked the question.  His view is this:  there are three types of definitions of people according to tax law: resident, ordinary resident, domicled.  Only UK domicled people who sell investments, then remit the money into the UK, must pay capital gains tax. 

Your UK accountant is wrong, or you misunderstood him.

1)  Domiciled and Resident people must pay tax on income whether remitted or not.
2)  NonDomiciled and Resident people pay tax only on remitted income.
3)  NonResident people don't pay tax on remitted income, whether Domiciled or not.

In colloquial terms, Domicile is where your heart is, Residence is where the rest of you is.  So, since you're from the USA, your heart is back there, but the rest of you is here.

4)  A huge gift from your father will trigger US gift tax obligations.  He should not make the gift without speaking with his tax advisor.
5)  You selling stock and then giving a gift of the proceeds to your father would trigger a US gift tax obligation too.  You shouldn't do that without considering the long-term consequences of such an action.

6)  There are ways to remit sums from capital gains into the UK without triggering remittance tax.  This requires a planning session with a qualified UK tax accountant who handles remittance taxation.  You supply him or her with a list of ALL your assets held outside the US, listing each stock individually.  For each item on the list, you provide the purchase date, the purchase price, and the current price.  S/he then computes how much taxable capital gains would result from the sale of each item in the UK, including
    currency exchange differentials,
    UK tax reliefs (special tax breaks for capital gains), and
    credits for US tax paid on the gains (assume 15% on everything owned >1 year).
S/he then ringfences the items that will generate the lowest remittance tax, which could very easily amount to zero.

That's why folks pay accountants - not to run numbers after the fact, but to run them beforehand so they owe no tax.

Lizzit- thank you so much.
i called the UK accountant, and that's what they told me.  knowing that they're wrong on the first thing i asked , doesn't inspire confidence in them at all.  i need to release these funds to purchase a house, and i'm itching to do this.  but i'm slowly accepting that i need to be patient.  gather all relevent information, and then go to an accountant who can best advise me.

any idea what the cost of using an accountant to advise on capital gains, and preparing 2005 tax returns would be?  am I looking at £1,000 or more? 

-meg

worked out the profit to be £9,500.  am i liable for taxes on all £9,500 or just on £1,500 that's above my £8,000 excemption? at what rate is this taxed? 

Meggles,

the tax is on the amount over £8000.  You'll get tax credit for US tax paid and something called tax releif, so it won't be as high as 40% of the £1500. 

A UK accountant for your UK Apr 05 - Apr 06 should cost you about £350 - 500.  I can send you some recommendations offline (email me privately).

A US accountant for your US 2005 should run between £500 - 1,000 if they live in England and are also familiar with British tax law (which ideally they would be).  A stateside one unfamiliar with British/US tax interfaceing can cost between $200 - 1,000.  You need to work out whether you can afford to have someone who doesn't know both sides of the equation working on your account, since you could easily "rob Peter to pay Paul"; that is, save money on one side only to get wholloped on the other.

Seeing as the gain is so small, I think it'd be worth the small amount of additional tax. 

Good luck on the house purchase!