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bigduckontax
bigduckontax, Accountant
Category: Tax
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I've been a non resident for 11 years and complete a yearly

Customer Question

I've been a non resident for 11 years and complete a yearly self assessment. I have two properties in the UK. The first property was my main home and has been let out since I departed in 2004. The second property was bought in Sept 2014 as an investment and is let out. How will the change in capital gains tax effect me from April 15? Property 1 was bought for 85K in 2001 and is now worth 190K, I lived in it up to 2004. The second property was bought for 400K and is now worth circa 460K. I pay no tax on the lettings as they are below the tax threshold after interest and management fees.
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.
The new rules for non residents are that any gain made on disposal from April 2015 values will be liable to Capital Gains Tax (CGT). You should ensure that you have the homes valued to determine an April 2015 'Acquisition Price' for subsequent CGT calculations. You have an Annual Exempt Amount of 11K [14/15 rates] to offset any gains. This is a 'Use it or loose it' allowance [HMRC nomenclature] so staggering sales over two tax years might be beneficial.
You might well be entitled to Entrepreneur's Relief on the properties which will limit your tax exposure to 10% of the gain instead of the normal 18% or 28% or a combination of the two rates depending on your income including the gain in the year of sale.
You might well be advised to retain a local, trusted professional to handle the CGT position with HMRC in the event of disposal.
Barclays have a good resume of the position here:
https://wealth.barclays.com/en_gb/internationalwealth/your-financial-life/could-the-new-uk-property-tax-affect-you.html
I do hope I have helped you with your question.
Customer: replied 2 years ago.
Thanks Keith, assume if I disposed of assets prior to April 1 2015 I wouldn't attract any CGT as per the existing rules for non residents?
Expert:  bigduckontax replied 2 years ago.

Correct; April 5th actually!

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Customer: replied 2 years ago.
Hopefully last question, as per the existing rules what Income would the higher rate of 28% taxation begin at?
Expert:  bigduckontax replied 2 years ago.
This is complicated, time for the wet towel round the head and the backs of lots of envelopes for a qucik calculation. Here is the HMRC advice on how you calculate the rates:
'Working out your Capital Gains Tax for 2013-14
You need to work out your total taxable income before working out which Capital Gains Tax rate to use.
First work out your taxable income by deducting any tax-free allowances and reliefs that you are entitled to.
Next see how much of your basic rate band is already being used against your taxable income. The basic rate band for 2013-14 is £32,010.
Allocate any remaining basic rate band first against gains that qualify for Entrepreneurs' Relief - these are charged at 10%.
Next allocate any remaining basic rate band against your other gains, these are charged at 18%.
Any remaining gains above the basic rate band are charged at 28%.
Using your Annual Exempt Amount
If you have gains which are charged at different rates, you need to decide how to use your Annual Exempt Amount. You use it against the gains charged at the highest rates to minimise the tax you owe.'
Now you see why I suggested you might need a professional to assist at disposal time.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

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