UK tax year end planning 2019/20: Offshore Income Gains

Here are the latest updates to Offshore Income Gains for those taxpayers who are paying or will be paying UK tax on their worldwide income and gains.

Last updated: 3 February 2020

For those taxpayers who are paying, or who will be paying UK tax on their worldwide income and gains, you should be aware that when you invest in non-UK collective investment funds that do not have HMRC reporting status (e.g. US mutual funds) any gains made on the sale are charged to UK Income Tax (up to 45%, or 46% in Scotland) and not UK Capital Gains Tax. Any loss can be taken as a capital loss but cannot be offset against income or Offshore Income Gains.

Similarly, US taxpayers should be aware that non-US collective investments can be caught by punitive PFIC rules.

What should I do?

Americans living in the UK should be aware that investments held in the US, such as US mutual funds, that do not have UK reporting status would be taxed at higher rates than the normal 20% Capital Gains Tax rate. Speak to your financial adviser about other options for US/UK tax efficient investment. 

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