I came to UK to live in 2006. I have been a resident of UK since then.
I lived in thta property from 2004 to 2006.
As UK resident for tax purposes, you are taxed on your worldwide income and gains. If you have suffered local tax on gain arising from sale of your property in India, you would claim foreign tax credit relief against tax on that gain in the UK.You declare this gain by completing supplementary page SA106 - Foreign when filing your tax return.More information on this can be found here
Gains arising from sale of property are chargeable to capital gains tax. You get relief against that gain if the property has been your main residence during period of ownership.
Gain is sale proceeds less [cost of buying the property + improvement costs of a capital nature + buying and selling expenses]. In the UK, there is no adjustment for inflation when calculating the gain.
If you are UK resident but not domiciled in the UK there are special rules which might apply to your foreign income and gains. In these circumstances you have a choice of whether to use the arising basis of taxation or the ‘remittance basis’ of taxation. If you choose to use the remittance basis for a tax year you will pay UK tax on:
any of your income and gains which arise/accrue in the UK; and
any of your foreign income and gains that you, or another relevant person, brings (or ‘remits’) to the UK, even if that remittance occurs in a later tax year.
If you are a long-term UK resident and you choose to be taxed on the remittance basis, you may also be liable to pay the Remittance Basis Charge.
The impact of residence and domicile are covered on Page 9 of HMRC guidance note RDR1 here
You say you lived in that property for 2 years before moving to the UK. This period would be covered by private residence relief. In addition, the final 18 months of ownership is also covered by relief as the property was your main residence at some point during ownership period. There is further relief available if the property was let and earned rental income. This income should have been declared to HMRC here.
CGT calculation - example Period occupied as main residence – (2004-2005) = 24 months Total period of ownership (2004-Jun 2015) say = 138 months Total period covered by private residence relief (24+18) =42 monthsGain chargeable after private residence relief (138-42)/138 =69.5% Lets say overall gain is £140k (not adjusting for inflation but based on historic costs)Taxable gain (140,000x69.5%) =97,300
If the property was let then you may claim letting relief up to a maximum of £40k per owner provided the property was main residence of joint owners. The rest is chargeable to CGT.
Now you claim gains allowance (£11,100 per owner) and pay CGT on the rest.
More information on private residence relief can be found here
I hope this is helpful and answers your question.
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Thanks for the details.
I notice you have viewed my response to your follow up question about CGT on sale of a property abroad (JACUSTOMER-mcuixpia- Last Viewed on 10/06/2015 at 14:34).
I am just checking to see if you have any issues relating to your question that I may not have addressed.
Please let me know if I can be of further assistance.
Great. Thank you very much for your help with this query.