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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4198
Experience:  FCCA FCMA CGMA ACIS
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Is CGT payable on a Home bought in 1983, lived in as principal

Customer Question

Is CGT payable on a Home bought in 1983, lived in as principal place of residence until 1999, when owners moved to Spain where they have lived ever since, being resident and registered as taxpayers in that country?
If same tax payer owned a third share in a Mobile Home Park for several years which has been sold in 2013-14 is there CGT payable?
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.
In the first case probably not assuming that the home in question was their sole of main domestic residence, but the law is changing as we speak! If you have been non resident in the UK for five years than there is no CGT liability, although under the proposed new rules you will be, but only on a gain from 6 April 2015 values. I cannot comment on the Spanish Capital Tax situation, this being an essentially an UK taxation advice site.
Regarding the Mobile Home Park this is a business of which the tax payer was a part owner and CGT would be payable on any gain made on disposal of the business. Were the tax payer in at the ground floor so to speak, ie at the beginning of the business, they might be entitled to Enrtepreneur's Relief which would limit the tax rate to 10% instead of the standard 18% or 28%.
I do hope I have been able to help you with your question. .
Customer: replied 3 years ago.

Re Mobile Home Park I forgot to mention that the day to day running of the business was undertaken by a Limited Company (in which the taxpayer was a one third shareholder) and that the Assets of the business were owned and sold by the taxpayer and his relatives. The CGT question I raised was to do with the selling of the Assets and not of the Company. Would this alter the answer you have so kindly given?

Expert:  bigduckontax replied 3 years ago.
No it would not! CGT would be chargeable on the gain made by the shareholder only on the sale of their shares. If the company sells the assets than that is an internal company matter. In any event companies are not liable to CGT, any gains or losses are put through the accounts in the normal manner, form part of the profit and loss computation, and are taxed under the Corporation Tax regime.
I do hope that clears up that little point.
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Customer: replied 3 years ago.

As the assets sold belong to the 3 individuals and they are all non resident I thought they might be able to avoid UK CGT.

The assets were rented either to the company (in the case of the Mobile Home Park) or to individual tenants (in the case of the Mobile Homes).

My client is not a director of the Company , nor is he employed by it. Can he claim Entrepreneurial Relief having owned (with the others) the assets right from the outset.

Expert:  bigduckontax replied 3 years ago.
Entrepreneurs' Relief; yes he can claim, he was in on inception. This will reduce his CGT tax fate of a flat 10%.
Th individuals will be caught by the new rules when they sell their shares as I explained in my original answer. This is a new rule in the Finance Bill, 2014 and is a tax avoidance measure. It also puts everybody on the same basis.
I do hope that clears the air on this matter. Always remember Benjamin Franklin's dictum that in life there are but two certainties, death and taxes. There is now a common clamp down world wide on these matters and much disclosure and exchange of information between financial institutions and governments particularly within in the EEA.
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Expert:  bigduckontax replied 3 years ago.
Thank you for your support.
Expert:  bigduckontax replied 3 years ago.
Response to clear my question list; well known Just Answer glitch!