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bigduckontax
bigduckontax, Accountant
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I hold a British passport ,working abroad for long time for

Customer Question

I hold a British passport ,working abroad for long time for over 10 years planning to a purchase a property in UK for my family. What are the tax implication?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.
In basic terms none whatsoever. If you own a property overseas too there will be complications with Capital Gains Tax (CGT) on ultimate sale of one or the other. On one property you receive Private Residence Relief (PRR) which is 100% on any gain. You can elect to which residence you wish PRR to be applied within two years of the purchase of a second property. Both you and your spouse share a common PRR, but if you buy your UK house in your childrens' name(s) then they will get the benefit of PRR. Of course, if you are merely renting overseas these difficulties disappear.
There are more complications though with gifting to your children if you remain in residence, but for a relatively simple answer I think I have covered most points. Please don't hesitate to ask a follow up question if parts of my answer which are unclear or need expanding. You will, of course, have to pay Stamp Duty Land Tax (SDLT) on purchase of an UK residence, but's the same for everybody.
Your world wide income might well be taxed in the UK if you are resident. You should clarify your position to HMRC by means of a form P85 which you can find and file on line and fortunately can be done at any time. On receipt of this form HMRC will class you as non resident. Merely owning property in the UK does not, in itself, attract UK taxation; residence does and you should take care not to spend more than 91 days in the UK each tax year to retain your non resident status. Also the UK has Double Taxation Treaties with countless countries which preclude the same income stream being taxed in more than one jurisdiction. The payment of tax to one state gives a tax credit against the other and vice versa.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3102
Experience: FCCA FCMA CGMA ACIS
bigduckontax and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

I will come back to you later this week regarding this issue. I understand that I do not need to pay for further questions Right?

Expert:  bigduckontax replied 2 years ago.
If you have a follow up question you are correct, you can continue to use this one.
Customer: replied 2 years ago.

what is the implication if a relative( British citizen) leave in the house in UK?

Expert:  bigduckontax replied 2 years ago.

This depends upon the relationship of the occupier to you; please advise.

Thank you for your support.

Customer: replied 2 years ago.

The mother or the owner's childern

Expert:  bigduckontax replied 2 years ago.
No problem; assuming that the Mother is your spouse then the PRR rules apply equally to her.
I am a diabetic and must have some lunch, like MacArthur, I will return.
Customer: replied 2 years ago.

The mother meaning the owner's mother

Expert:  bigduckontax replied 2 years ago.
So far you have been silent on two points. Firstly, is this your only house and secondly have you ever occupied same?
Customer: replied 2 years ago.

I am planning to purchase the house and may have my mother to occupy it

while I am working abroad

Expert:  bigduckontax replied 2 years ago.
Yes, I have gathered that, but is it the only residence you own or do you have another overseas?
Customer: replied 2 years ago.

I do not have an oversee property

Expert:  bigduckontax replied 2 years ago.
Right, then your UK property is your sole or main domestic residence. Note the 'or,' not 'and.' HMRC would love it to be 'and,' but is is not. You are not liable for CGT on your sole or main domestic residence. You do become liable if you let it out and cease to occupy, but otherwise PRR applies. HMRC at one time attempted to charge military personnel living in Government quarters CGT on their homes on the grounds that their quarter was their sole and main domestic residence. They had even gone so far as to persuade the MOD to issue a Defence Council Instruction on the subject. I arrived in an overseas station to find personnel in uproar over it and after my intervention the Instruction had to be hurriedly cancelled and the Inland Revenue, as they were then, put back in their box. No doubt the same misconception is still being trotted out to this day.
Customer: replied 2 years ago.

So if I own a property in UK and My Mother leaves in it. My earning from my work abroad is not taxed and as this property is my only PPR no CGT applied.Right

Expert:  bigduckontax replied 2 years ago.
If the property is your sole or main domestic residence then PRR applies unless you rent it out. PRR is Private Residence Relief and relieves CGT at 100%. Not many people realise that even if they own but one house any gain on sale is liable to CGT, but for the vast majority PRR absorbs all the tax.

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