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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4886
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I am a UK citizen. I have been non resident since the 1970's.

Resolved Question:

I am a UK citizen. I have been non resident since the 1970’s. Since 1984 I have been buying properties to let in the UK. I now have five all procured since I was a non resident. I have never lived in any of them.
I complete a SA return annually and pay tax on the revenue from the rent.
I understand that until April 2015 there was no CGT for non residents but that has now altered, though the tax would only be on the gains made from that date.
Two houses are located in Kent, two in Northampton and one in Hereford. I have had the two in Kent the longest, the first being purchased in 1984 for 58,000 pounds. Todays value I believe to be in the region of 185,000 pounds.
I am now considering the prospect of retiring to UK but I may decide to continue in my consulting business but after having made the move there.
My questions really revolve around the most tax efficient method, based obviously on the timing of making the move.
The one house in Kent (in Sandwich) that I have had the longest has the highest value, and essentially I would like to sell this one first, so that I can relocate to a place of my choice and purchase a house for me to live in.
My questions are as follows:-
1 Am I correct in thinking that the most cost effective way of me realizing the value of the Sandwich house without paying a large amount in CGT would for me to sell it whilst I am still non resident? i.e. paying CGT only on the gain made from the beginning of the 2015-16 tax year to the sale date?
2 Do I have to stay non resident for the whole of the 2015-2016 tax year to benefit from this or just until the sale date/
3 Can I sell two houses simultaneously on the same basis?
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for requesting I help you for your question.

My questions are as follows:-

[q]
1 Am I correct in thinking that the most cost effective way of me realizing the value of the Sandwich house without paying a large amount in CGT would for me to sell it whilst I am still non resident? i.e. paying CGT only on the gain made from the beginning of the 2015-16 tax year to the sale date?

[a]

If you were to sell the property before 5 Apr 2015 then you would escape CGT as you would qualify as a non-resident in UK for UK tax purposes.

If the sale took place after 5 Apr 2015 then your exposure to CGT would be the difference between valuation at 5 Apr 2015 and final sale proceeds. You would still be able to avail your gains allowance in the year of sale being a UK citizen and the gain would be net of costs

[q]
2 Do I have to stay non resident for the whole of the 2015-2016 tax year to benefit from this or just until the sale date/

[a]
The starting point is 6 Apr 2015 and provided you sell the property whilst still a non-resident then the gain is between 6 Apr 2015 and date of sale and you don't have to be non-resident for the whole tax year.

[q]
3 Can I sell two houses simultaneously on the same basis?

[a]
Each house sale is independent of each other and you could sell two houses simultaneously on the same basis.

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.

Yes I believe that you have answered the questions thank you very much. Should I act on your advice, and it should be questioned by HMCR, ire your answers referenceble in any way? And just to confirm - should I move back to UK two days after the sale, the CGT I would be exposed to would only be that which applied to the gain made between April 5th 2015 and the sale date.

Thanks and regards

Expert:  taxadvisor.uk replied 2 years ago.

Miles, thank you for your reply.

If you were to move back to the UK after such a long gap, tax year 2015-16 would be regarded as a split year and all income and gains realised prior to returning to the UK would escape UK tax.

More information on this can be found here

http://www.accaglobal.com/uk/en/discover/cpd-articles/taxation/fa14-statutoryresidence.html

I hope this is helpful

taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4886
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
taxadvisor.uk and other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.

best wishes.
Customer: replied 2 years ago.

Hello again. Yes, there is a further question. I now intend to return to UK on 1st June 2015 for,. in the first instance, a holiday. My house will be sold during this period. To still get the assessment of my NRCGT to be considered as that gain between 6th April 2015 and the date of exchange, do I need to still be careful of the days that I am in UK if the sale doesn't get completed for several months? Is it possible that if the period of the sale gets drawn out for too long, and for 2015-2016 I lose my non-residency status, would I then suddenly become CGT eligible as if I was a resident?

Thanks very much

Miles

Expert:  taxadvisor.uk replied 2 years ago.
.Miles, thanks for your reply and further question.

You have to be careful on the number of days you spend in the UK in tax year 2015-16.

If you were to become resident and the sale is completed once you are living here you would lose that concession given on NRCGT.

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

One further question. Of all my properties, I have never lived in any of them. If I return to the UK, I intend to sell one in such a way as to minimise my CGT liability. If I live in another of them for 2 years, does this make this house my main residence, which I can thereafter sell as a resident but free of CGT or is this an old rule?

Thanks and regards

Miles

Expert:  taxadvisor.uk replied 2 years ago.
.
Miles, thank for your further question. Although you should be raising a fresh question, I will answer it on this accasion.

You get private residence relief against CGT for that period the property is your main residence and not for the whole period of ownership unless you lived in it at all times.
If you made a property your main residence for two years and then moved to another property for another two years before selling the first one, you would be able to claim private residence relief and additional relief for a further 18 months and also letting relief.

I have given you an outline of how reliefs work.

I will happily answer a fresh question if you request that I help you in the body of your question.

Many thanks
Customer: replied 2 years ago.

Thank you for that answer - you have given me a good insight, but there are still many questions. I have to consolidate my thoughts. If I returned to UK and was there for 60 days, (with one tie), and the property sold during that time, could I then stay in UK, having claimed split year treatment, thus avoiding CGT (apart from on that gain made from 5th April), and becoming, thereafter, a resident?

Thank you very much. If I have further questions, I will raise a new one.

Expert:  taxadvisor.uk replied 2 years ago.
Once you come back and sell the property whilst in the UK, you would lose your exemption. You should do that whilst still abroad and once you are here then split year treatment would kick in.

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

I'm sorry to come back once more, but are you saying that I can't come back for any days in the year that I sell the property? Surely I could come back for a certain amount of time? Could I visit, as usual, then leave as the property is sold before returning in the same year for good?

Thanks

Expert:  taxadvisor.uk replied 2 years ago.
Miles, your total numbers of days in the UK in a tax year matter.

If you were to come to the UK and sell the property whilst you still qualify as non resident in the tax year, its fine. But what you are suggesting is come back, sell the property and go away again to come bachk and be considered for split year within that tax year.

This won't work.

Many thanks
Customer: replied 2 years ago.

I understand. Thank you very much

Regards

Expert:  taxadvisor.uk replied 2 years ago.
You are welcome.

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