Question
I have some unit trusts in a portfolio that I don't want to sell at the moment. I am considering moving abroad for a job opportunity and this would be a permanent move with no intention to return to the UK.
If I keep my unit trusts, what tax would I pay on the "income" amounts that appear on my statements and are reinvested into the plan?
Also, would I be able to make changes to the funds (switches) without having to pay UK capital gains tax on any gains that selling the old funds makes?Answer
Assuming you become non UK tax resident (more details in my answer to http://www.candidmoney.com/questions/question95.aspx this question) then you won't be liable to UK tax on dividends or interest paid out by your funds.
However, dividends can never be truly tax-free as they're paid out of taxed company profits. As a concession basic rate taxpayers don't have to pay any further tax on the dividends they receive, but non-taxpayers (or those holding the shares/funds in an ISA or pension) can't reclaim any tax (Gordon Brown stopped this back in 2004). But becoming non resident would mean no longer having to pay any extra UK tax on dividends if you're a higher rate taxpayer.
If you have funds that pay interest rather than dividends (e.g. corporate bonds) then complete HMRC Form R105 (AUT.1) to ensure no UK tax is deducted in future.
As for capital gains tax, you'll still be liable until you've been non resident for five full tax years, although as your usual annual allowance (currently £10,600) will still be available this may not be a problem.
If any of the funds are held within an ISA they can remain there which makes life simpler (as no income or capital gains tax will be deducted), although you can't add to these holdings while non resident. If you haven't used this year's ISA allowance (£10,680) consider transferring some of your existing funds into it.
Finally, bear in mind that you might be liable to tax in your new country of residence instead, so I'd seek advice locally as appropriate if you end up moving.
I have some unit trusts in a portfolio that I don't want to sell at the moment. I am considering moving abroad for a job opportunity and this would be a permanent move with no intention to return to the UK.
If I keep my unit trusts, what tax would I pay on the "income" amounts that appear on my statements and are reinvested into the plan?
Also, would I be able to make changes to the funds (switches) without having to pay UK capital gains tax on any gains that selling the old funds makes?Answer
Assuming you become non UK tax resident (more details in my answer to http://www.candidmoney.com/questions/question95.aspx this question) then you won't be liable to UK tax on dividends or interest paid out by your funds.
However, dividends can never be truly tax-free as they're paid out of taxed company profits. As a concession basic rate taxpayers don't have to pay any further tax on the dividends they receive, but non-taxpayers (or those holding the shares/funds in an ISA or pension) can't reclaim any tax (Gordon Brown stopped this back in 2004). But becoming non resident would mean no longer having to pay any extra UK tax on dividends if you're a higher rate taxpayer.
If you have funds that pay interest rather than dividends (e.g. corporate bonds) then complete HMRC Form R105 (AUT.1) to ensure no UK tax is deducted in future.
As for capital gains tax, you'll still be liable until you've been non resident for five full tax years, although as your usual annual allowance (currently £10,600) will still be available this may not be a problem.
If any of the funds are held within an ISA they can remain there which makes life simpler (as no income or capital gains tax will be deducted), although you can't add to these holdings while non resident. If you haven't used this year's ISA allowance (£10,680) consider transferring some of your existing funds into it.
Finally, bear in mind that you might be liable to tax in your new country of residence instead, so I'd seek advice locally as appropriate if you end up moving.
Read this Q and A at http://www.candidmoney.com/questions/question556.aspx
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