Residency & transferring money SA -> UK

savageHK

Hello all

I hope someone has some pointers for me.

A relative, who has UK citizenship but has never lived or worked in the UK, is coming up to retirement.

At present she is resident in South Africa (SA).

At present she's undecided as to where she will 'live' but it's likely she will share her time between the UK and SA, and she would like to buy a property in the UK.

(1) From the SA side, it is possible to transfer up to R1 million a year overseas without any problems. But, where do we put it in the UK? I'm hazarding that if it is transferred to myself I'd trigger all sorts of alarm bells at the bank. Is there also a tax implication if I receive such a large sum? (R1 million = v. approx £60k at present). I'm guessing it might be seen as inheritance tax avoidance!

(2) If she shares time between the UK and SA, what do we have to do tax wise? I believe there is a double taxation agreement in place, but am not sure what this means practically. I've just downloaded the UK's statutory residence test PDF, and am starting to look through all 105 pages... She will probably own property in both places, nevermind shares and bank accounts etc.

Thank you!

chrismac1

1. It should not trigger anything nasty. I have a client who runs a business in the USA and lives in RSA. He regularly transfers up to £150k between these various countries as he runs a property business. Whilst I have reason to believe that the bank anti-moneylaundering team has given him the "full Monty", this is no more than I have done myself! There is no UK tax implication unless your relative dies within 7 years of a transfer. Up to that point it is a "potentially exempt transfer" which you can Google for more details.

2. Unless she becomes a UK tax resident, which you are already covering, she is not required to complete a UK tax return. I believe RSA has a very similar test in place, though like 90% of the rest of the World it is on calendar years and not the daft UK tax year ending 5 April.

In her SA return, she can enter any UK tax suffered on income from the UK and then she will only pay SA tax on that income to the extent that SA tax is higher than UK tax. That's what double tax treaties mean - your overall tax bill is the higher of the two countries' bills.

My guess is that she will not become a UK tax resident until such time as she starts severing her ties in RSA and building up ties here - by living here, having her GP here, UK driving licence and so forth. But the devil can be in the detail so carefully go through the residency test stuff each time there is a change in her circumstances.