Capital Gains tax on a UK investment.

[MartoMiyagi]

Hi,

I have been a long time lurker / reader of this forum and would like to say thank you for all the incredibly detailed information that has been shared. Especially regarding the UK voluntary pension contributions.

I have a question regarding how I might be taxed on gains made in the UK. I made a loan of 28k to a friends property business to cover the refurb of a new purchase. The loan was set up with a simple 8% interest per year, payable in full upon sale or re-mortgage of the property. It has now been sold and is nearing completion.

I financed the loan from savings I had festering away in my UK account. The repayment and interest is likley to go back in to that account this month or next.

I have read that tax is due on on any supplementary earnings over and above ¥200,000.

My question is how is this tax paid and how is it calculated the time lapse has crossed 2 tax years? Is that even relevant? Do I just declare this on my next kakuteishinkoku? Or does that wait until I transfer the cash over here?

Many thanks in advance for any information or advice any can offer.

Mart

[sutebayashi]

Not sure what sort of tax this falls under… could it be interest income perhaps?

But what I can comment on is that, yes you would report this on a kakutei shinkoku for Japanese tax purposes, and then pay the Japanese tax with Japanese yen, shortly thereafter. Your foreign funds can remain where they are overseas, there is no need to use them to pay the tax. Whether you transfer those foreign funds to Japan has no bearing on whether you have to pay the Japanese tax on them. (I am assuming here that you are full-on Japanese tax resident.)

[MartoMiyagi]

Sutebayashi,

Thank you for your reply. Yes I am a tax resident here and appreciate your help.

[Tkydon]

Assuming you are a Permanent Resident for Tax Purposes; i.e. you have been in Japan for more than 5 years in the last 10 years, the Interest Income is taxable in Japan, whether you remit the funds to Japan or not.

Tax on Interest

https://www.mof.go.jp/tax_policy/summar ... n-UKEN.pdf

Article 11 refers.

https://www.nta.go.jp/taxes/shiraberu/s ... df/050.pdf

Pages 58-59 refer.

The Interest would be taxed under the Separate Taxation Method at 20.315% (15% National, 0.315% Reconstruction/Defense, and 5% Residents' Taxes), with a Foreign Tax Credit for any tax incurred in the UK.