If you have read any of my other questions you will know that my husband and I have a toxic mix of assets because of ignorance when we came to live in the U.K. and failure, therefore, to plan.
Re-cap of our situation.
- My husband was seconded here in 2011, tax-equalized by his company so we were responsible solely for US taxes.
- My husband's taxes in the UK have been filed each year on the Remittance Basis.
- In the US we each own mutual funds (non-reporting).
- I discovered this year that I should have been filing taxes in the UK because of investment income from the mutual funds.
- I also discovered that as a UK born citizen HMRC would most likely consider me to be domiciled here despite having lived outside the UK for over 30 years.
- I am now up-to-date and fully compliant with my UK taxes as an Arising Basis, domiciled taxpayer.
- After living here on secondment for 6 years, and husband having retired this year, we would prefer to settle in the UK rather than the US.
- I have a large capital gain on my non-reporting mutual funds.
- In addition my funds are tainted with income from my husband during the years he has been taxed on the RB in the UK.
- We have decided to ring-fence these funds outside the UK. We plan not to remit any money from these funds to the UK.
Two Questions:
1) Can I, as an Arising Basis taxpayer, gift my funds to my husband? The plan would be for him to convert the non-reporting funds to ETFs (as a RB taxpayer he would not have to pay UK taxes for the conversion).
and, if so
2) Can he, at a later date, gift the ETFs back to me so that I can make use of my allowances for Capital Gains and Dividends?