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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Can't make head nor tail of CGT position on sale of our main

Resolved Question:

Can't make head nor tail of CGT position on sale of our main residence!
My wife and I live abroad as my job is in Middle East...
We have owned a property as our family home since 1985...purchased for £53000...
We lived in the property until late 1998 when we went to the Middle East...since when the property has been let...
We have been advised a current value of c.£650000
We wish to relocate in UK and purchase for c.£400000
We do not currently submit PAYE returns as our income is below our personal allowances...agreed by HMRC...
Please give us an idea of our liability for CGT on this move at the current time
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

Can you tell me whether you own a home in the Middle East or not please. When you first went to the Middle East, was that because your existing employer sent you there or because you chose to take a job in the Middle East?
Customer: replied 2 years ago.
We do not own a property in the Middle East...
I chose to take a job there!
Expert:  TonyTax replied 2 years ago.
Thanks.

Leave this with me while I draft my answer. It will take a while so please bear with me.
Customer: replied 2 years ago.
OK
Expert:  TonyTax replied 2 years ago.
Hi again.

ABSENCE ABROAD RELIEF AFTER RETURN TO UK

Take a look at the notes starting at CG65030 here and ending at CG65065 here. Click "Next Page" at the bottom right to move through the intervening pages. I'm referring to absences abroad as an employee. The legislation doesn't make it clear whether the relief for an absence abroad covers a situation where an employee is sent by their existing employer abroad only or whether the relief can apply to someone such as yourself who chose to take a job abroad.

In the absence of the option you have below, I'd claim main residence relief for the periods from when you bought the property until late 1998 on the basis that you were living in the property and for the period from when you moved abroad to when you sell the property provided you move back into it before you sell it. That would cover the whole gain.

REBASING TO 5 APRIL 2015 AND SELLING BEFORE RETURN TO UK

Take a look at the notes here.

Prior to 6 April 2015, a non-UK resident individual could sell a UK property and pay no CGT in the UK. With effect from 6 April 2015, non-UK residents can be liable to UK CGT on gains made on the disposal of UK residential property. However, there are several calculation methods which will reduce exposure to CGT of a non-UK resident.

1 You can ignore everything which occurred prior to 5 April and use the 5 April 2015 value of the property as its "cost" for CGT purposes, as if you had bought it on that day. You would also qualify for exemption from CGT for the last 18 months of ownership since the property was your main home at some point. That would give you until 5 October 2016 to sell the property as a non-UK resident completely tax free. See the example under the heading "Example of a rebasing calculation involving Private Residence Relief - gain and loss from 5 April 2015 to disposal".

2 There are other methods which you can read about in the link I gave you but the one in 1 above is clearly the one that is most to your advantage as you have owned the property for a long time and the potential gain is very high.

I hope this helps but let me know if you have any further questions.
Customer: replied 2 years ago.
Thanks for your detailed response...
Will this situation remain the same if we are not in fact returning to the UK at this time but continue to be non-resident...
All other details as already mentioned!
Expert:  TonyTax replied 2 years ago.

If you still sell the property but remain non-UK resident, then the situation is the same. However, if you hold on to the property beyond 5 October 2016 in the case of using the 5 April 2015 value as the cost, you may have some CGT to pay. The amount would depend on the sale price of the property. You ought to get a valuation of the property as at 5 April 2015 done.

Unless you reoccupy the property before it is sold, you won't be able to claim exemption from CGT using the absence abroad rules.

Tax rules can and do change over time.

Customer: replied 2 years ago.
Hopefully the final question...
How long would the period of re occupation need to be?
Thank you for info so far!
Expert:  TonyTax replied 2 years ago.

The few months it woluld take to sell it. I wouldn't put it up for sale until you had moved back in, though that shouldn't matter.

If I were you, I'd sell up whilst still being non-UK resident.

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