How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4200
Experience:  FCCA FCMA CGMA ACIS
75394688
Type Your Tax Question Here...
bigduckontax is online now

My job required me to work overseas years but I

Customer Question

My job required me to work overseas for several years but I have returned and am again resident for tax purposes. If I now sell my principal residence, will I be liable for CGT on any gains? During my overseas assignment my house was not rented out and although I did not live in it it was my principal residence. If I am liable for CGT will tax apply to the entire gain?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.
Let us get rid of one niggling point. When you went overseas to work did you submit a form P85 to your tax office to make you non resident. If you did not you should do so now and furthermore tell HMRC you are back again. On receipt of that latter information HMRC will split the year of your return into two parts, one non resident and one resident.
It is highly likely that the gain made on the sale of your house would be liable to CGT. However, a number of factors reduce your exposure. Firstly, that period during which you occupied it before your departure would entitle you to Private Residence Relief (PRR). Secondly there is what is classed as qualifying relief and working overseas is one of these. Thus you should escape CGT on any gain on sale altogether as PRR will apply and that relieves the tax liability at 100%.
I do hope I have been able to set your mind at rest on this matter.
bigduckontax and other Tax Specialists are ready to help you
Customer: replied 2 years ago.
Many thanks for your prompt response. i did submit a P85 when I left and have a letter of acknowledgment from HMRC. I notified HMRC when I returned and have already filed a tax return as a resident. I was most interested to learn what you say about qualifying relief and would be most grateful if you could point me in the direction of any guidance HMRC provides on the matter.
When and if I sell my house do I need to declare the capital gain and claim CGT exemption or is it up to HMRC to challenge me? I can imagine them arguing that since I did not live in my house for several years it ceased to be my principal residence.
Many thanks for your help.
Expert:  bigduckontax replied 2 years ago.

Here is the advice from Tax Aid:

'You can be away from your principal private residence for work (4 years in UK; without restriction if abroad) or any other reason (up to 3 years) and still qualify for these periods so long as you re-occupy the property as your principal private residence after the absence. This requirement to re-occupy the property is relaxed in respect of absences resulting from work where the terms of employment prevent re-occupation of the property.'

The legislation specifically states 'sole or main domestic residence.' Note the word 'or' not 'and.' HMRC like to interpret the legislation as 'and' and this is incorrect. The Inland Revenue tried the same trick in the mid 70s and retired with a considerable amount of egg on their faces. As you are selling your sole of main domestic residence PRR is given automatically. If challenged merely advise the the absence was due to working overseas.

Please be so kind as to rate me before you leave the Just Answer site.

Expert:  bigduckontax replied 2 years ago.
Thank you for your excellent support.