Where to get good financial advice?

mattdrummer

short_butt_sweet wrote: »

"tax loss harvesting" is designed for people subject to US tax, because some amount (i forget) of losses is allowed to to set against income. it doesn't help you when you're subject to UK tax. typically, when subject to UK tax, you might want to realize gains up to just under your annual capital gains tax allowance.

and if wealthfront have given you a lot of disposals for CGT purposes, it may be messy to calculate any tax liability, and fill to in the CGT section of a UK tax return (if you need to do that).

but it may be worse than that. if you are invested in US ETFs (as you say in another post), then are they reporting funds for UK tax purposes? if they are not (or even were not for any part of the time you held them), then any capital gains are taxed in the UK as income, instead of as capital gains. (but any realized losses are treated as CGT losses, and cannot be set against income.)

overall, you will probably want to extract yourself from wealthfront now you are paying UK tax. and it may be a bit tricky to figure out the tax due before you do.

Thanks, that's helpful.

From a quick glance, it looks like at least some of the ETFs are reporting funds, so that's good. I'll check the rest to be sure.

Yes, my concern around the harvesting was that it would make it complicated to do the filing.

As I'm self-employed I already have an accountant doing my taxes - presumably they should be able to handle overseas capital gains if I provide the right documentation? It seems then that I should realise gains up to my allowance for FY18/19, then deal with the rest in FY19/20.

mattdrummer

OldMusicGuy wrote: »

If you have income which is "effectively connected" with the US, you need to file a tax return, regardless of where you live. If the Wealthfront stuff impacted your tax return in the US in terms of income in any way, it's highly likely you will need to file a 1040NR. None of the US tax software will work for a UK resident, so you will have to fill out the form yourself or pay someone to do it.

I suggest you read the 10140NR istructions and see if you think the Wealthfront stuff could create a tax liability. You can get them here: https://www.irs.gov/pub/irs-pdf/i1040nr.pdf. If you cannot understand these and decide yourself (and the Expat forum I linked to doesn't provide an answer), you will have to employ a US tax specialist that does expat taxes to help you.

The 403b seems to be the same concept as a 401k, so the best bet is to leave those invested and take them like you would a UK pension when you reach 59 1/2. You cannot transfer them to a UK pension. You will need to decide the most tax efficient treatment for those when you reach that age. Thanks to Mr Trump's tax reforms, it made more sense for me to take mine as a lump sum distribution.

Thank you.

If I'm interpreting you correctly then I wouldn't need to file for 2018 since everything that was sold on my behalf in 2018 (through Wealthfront) realised a loss, so there was no income.

But then I would need to file for 2019 if I realise gains now to fit it into FY18/19 UK. So then I need to make sure I don't get double-taxed.

Will follow up on the forums you shared, but any more thoughts very welcome.

Thanks again.

OldMusicGuy

mattdrummer wrote: »

If I'm interpreting you correctly then I wouldn't need to file for 2018 since everything that was sold on my behalf in 2018 (through Wealthfront) realised a loss, so there was no income.

But then I would need to file for 2019 if I realise gains now to fit it into FY18/19 UK. So then I need to make sure I don't get double-taxed.

Make sure you read through the 1040NR instructions via the link I posted. They will help confirm if you do/do not need to a tax return, and also highlight what you need to watch out for in future.

You might find this HMRC link helpful: https://www.gov.uk/tax-foreign-income/taxed-twice

I did read through the relevant sections of the UK/US treaty......

londoninvestor

Out of interest (thankfully it's purely academic for me!), how does UK CGT work on the capital gains distributions that US mutual funds pay?

Is it a UK taxable gain too, mitigated by Foreign Tax Credit Relief for any US CGT you paid on it?