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Hi SAM TAX, If Im a British citizen settled in UK and my

Resolved Question:

Hi SAM TAX,

If I'm a British citizen settled in UK and my non-EU passport holder wife sells property abroad BEFORE applying for settlement visa, would she/we be liable to pay any CGT on any profits?

Thanks
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi


Thanks for your question and asking for me

Yes, capital gains would be due and her applying for a settlement visa has no bearing on the capital gain position, this liability arises merely due to the fact that she is resident in the UK (physical presence) and is selling a property that is not her main residence.

However - if it was once her main residence and the sale of the property is than 18 months since that situation ceased - then there is no capital gains to pay, as the time she lived there plus the last 18 months of ownership are covered under the exemption of private residence relief.

If it has never been her main residence - then capital gains will arise on the profits (less costs to buy and sell and any capital improvements)

If it was once her main residence, and its been more than 18 months since this ceased to be the case, then capital gains will, as advised above arise, BUT if she let this property out and declared the rental income to HMRC then private lettings relief can also be considered.

And of course the first £11,000 of any gain is exempt.

I appreciate your wife is a non EU passport holder, and it may well be that she does not plan to remit this money into the UK, and may ask to be taxed under the remittance basis - so I have added a link here if this might be the case.

http://www.hmrc.gov.uk/international/remittance.htm

But as you are a UK passport holder, as her husband and there does seem to be a possibility that a settlement visa is to be applied for, then this does not suggest that she will be treated as non domicile in the UK - (and there could be annual tax charges if she has lived in the UK for more than 7 out of the last 9 years/12 out of the last 14 years rather then the tax due, which at the cost of £30,000/£50,000 can often be more than the tax arising itself!!)

Thanks

Sam

Customer: replied 2 years ago.

Many thanks for your informative and thorough reply as always. I've been working overseas so wife hasn't lived in UK and the property in her name abroad is rented out and not her main residence. With this in mind, how can we minimize our exposure to the CGT? Thanks.

Expert:  Sam replied 2 years ago.
Hi Mohammad

Thanks for your response and further question

The only way is for her to minimise UK capital gains , is to sell the tax year before you are due to settle in the UK, this will clear her of any UK tax to consider - but then she should check whether there is any tax liability in the country in which the property is situated and/or the country in which she resides.




Thanks

Sam
Sam, Accountant
Category: Tax
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Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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