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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4996
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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We have lived in Hong Kong last 14 years. We bought

Resolved Question:

We have lived in Hong Kong for the last 14 years. We bought a house in London over 20 years ago and lived in it until we went abroad. It has been rented out to date. We are now non UK tax payers. If we chose to sell our place. How much tax would we pay? Would it make more sense for me to become a UK tax payer again? Can I be a UK tax payer without it affecting my husbands status of a non payer?
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

There are changes to CGT as far as it relates to properties owned in the UK by non-residents and these come into force from 6 Apr 2015.

At present non resident in the UK for tax purposes is not subject to UK capital gains tax.
If you were to sell it before 6 Apr 2015, you would escape CGT in full, being non-resident in the year of sale and been out of the country for at least 5 full tax years prior to sale.

If the property is jointly owned then after 6 Apr 2015 non-residents will start paying CGT on property gains.

More information on how changes to CGT for non-residents may affect you are covered in this HMRC consultation document here..

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/298759/CGT_non-residents_condoc.pdf

You may find this link helpful too

https://wealth.barclays.com/en_gb/internationalwealth/your-financial-life/could-the-new-uk-property-tax-affect-you.html

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.


Customer: replied 2 years ago.

After 5th April, is there any way that I could come back and live in the property so becoming a UK resident again? If so, how long would I have to reside there for? Would my husband have to sign the house over to me before we sold it, instead of it being jointly owned ?

Customer: replied 2 years ago.

Also, how much CGT would we have to pay please?

Expert:  taxadvisor.uk replied 2 years ago.

Thank you for your reply.

If you were to become UK resident for tax purposes once again, then all period the property remains as your main residence would be covered by private residence relief against CGT.

Bearing in mind, the last 14 years the property has been let, you would have to spend a good few years as your main residence to mitigate CGT because at present around 62% of the gain would be chargeable, if you were to main this house your main residence again.

If you sell before 5 Apr 2015 there is no CGT payable.

If your husband remains non resident then gain from 6 Arp 2015 to point of sale only would be considered for CGT purposes. If it is your intention to live abroad, then you should be concerned about gain from 6 Apr 2015 (property valuation on that date) only as gain to 5 Apr 2015 would escape CGT.

You may wish to perform some rough calculations before you consider your next move.

I hope this is helpful and answers your question.

Customer: replied 2 years ago.

So if our house now is worth 500,000 pounds. How much tax would we be paying before 5th April 2015 and after 5th April 2015 please?

Expert:  taxadvisor.uk replied 2 years ago.
Thank you for your reply

If the property is worth £500k -
there is no tax payable on the gain (and not on the valuation) if sold by 5 Apr 2015.

If you were to sell it after 5 Apr 2015 and you remained non-resident then the gain between the valuation on 5 Apr 2015 and the sale proceeds would be chargeable to CGT.

Let say you decide to live in Hong Kong post 5 Apr 2015 and sold the property later in the year for £600k.

Your chargeable gain would be £100k less gains allowance for both of you being UK Nationals (i.e. £11k each). the balnec would be taxed at CGT rate of 18%, 28% or a combination of both depending on your UK based income in the tax year.

Worst scenario - CGT at 28% on £78k being £21,840.

I hope this is helpful.
Customer: replied 2 years ago.

Thank you, ***** ***** eased my mind. We bought the place in 1993 for 93,000 pounds, its valued now at approx. 500,000. If we were to sell now, what tax/expenses would be payable please?

Expert:  taxadvisor.uk replied 2 years ago.
Thank you for your reply.

If you were to sell now you would only pay Agent's fee and legal fees.
No CGT to pay.

Good news.

I hope this is helpful and answers your question.

If you are happy and there are no more issues I will appreciate if you would kindly rate/accept the service I provided to ensure I get credited for it.

taxadvisor.uk and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Thank you, ***** ***** most helpful.

Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer and for your kind words.

Best wishes.