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I am 54 years old and a British passport holder, though I've

Resolved Question:

I am 54 years old and a British passport holder, though I've been resident and tax domiciled in Andorra since 2002.
However, I entered into a civil partnership in the UK in September 2006.
I own a Gibraltar based Ltd company (non trading) that owns a property in the UK worth possibly some 1.9 million, which my partner lives in, and a property in both Spain and Andorra worth together some £300k
I am concerned that I may now need to look to register in the UK for ATED tax, although the company has no income and so ask if this is the case?
If this is the case, can I sell or gift the UK property to my UK civil partner without incurring a stamp duty at 10-12%, or is there any other option?
Submitted: 1 year ago.
Category: Tax
Expert:  Sam replied 1 year ago.
Hi
Thanks or your question, I am Sam and I am one of the UK tax experts here on Just Answer.
If you were generating income (rental) then this would not give rise to this charge arising as the property is worth more than £500,000 but I am afraid this ATED tax will apply to you, Its the fact its not generating income and not used by you, that creates the issue of whether a charge arises.
Link added here for your information (although you do seem to well researched in the matter) https://www.gov.uk/annual-tax-on-enveloped-dwellings-the-basics
If you sell the property you may have a capital gain consideration known as Non Resident Capital Gains tax(which will arise in the UK as your property is in the UK) which came into affect 6 April 2015 so will only affect the increase in value of the property from that date to the date of sale/transfer.
And if you do not fulfill the non residency criteria then there will be a capital gain consideration
But if you transfer the property then transfers between spouses (which I am glad to say includes civil partners) is deemed to be exempt.
Stamp duty will only apply if there is a mortgage outstanding - if a sale but none with a gift.
I hope this advises you accordingly - do let me know if I can be of any further assistance.
Thanks
Sam
Customer: replied 1 year ago.

Hi Sam,

Thank you for your reply.

Just to clarify, my UK civil partner has always lived in the UK property at no rental cost, but I don’t think this circumvents the need for the property to be ATED registration as you say, unless I am missing something.

It is good to know that a transfer of the UK property from my GIB company can be accepted as between civil partners and would be exempt from CGT, since the property was purchased a long time ago such a tax would have been costly. The gain from April 2015 until now would, in any event, have only been negligible.

There is no loan or mortgage on the UK property which fortunately, from what you say, prevents the need for SDLT being applied.

I assume then that my civil partner only needs to instruct a UK solicitor to arrange transfer of the deeds from my Gibraltar Ltd company into his name? In any event, as we are civil partners it makes no difference for security as to ownership.

Such a change would, I assume, mean that my civil partner will need to declare it in some format to his accountant & tax office? If so, is it advisable to declare this as a gift or a regularisation of assets between the civil partners, just unsure of any ramifications?

If the property was to be transferred from the GIB company into both my name and that of my civil partner, does that raise a tax implication or complicate matters in anyway, which I would want to avoid both?

Please advise if I have misunderstood anything you have said.

Thanking you.

Nas

Expert:  Sam replied 1 year ago.
Hi Nas
Thanks for your response
I was aware that your partner had always lived in the UK but this issue is an offshore company owns this property and you are linked to the offshore company and also are abroad so so you DO need to alert HMRC - but as we are only July 2015 - if you make the necessary arrangements to transfer the property to your partner then this will mean its his main residence - and the tax due from April 2015 to date again will be negligible (as you point out)
Any transfer I would just ensure both of you keep copies of the relevant transfer (dates etc) and of course this would be recorded by a conveyancer/solictor for land registry purposes.
And any future sale would see your partner free of capital gains as
1) The transfer was made when it your partners main residence
2) It will remain the main residence for your partners purposes
But
If you place the property into a UK company - this then creates a small issue now, but an ongoing issue between then and sale date, as it can then not be credited with being anyone's main residence and therefore capital gains charges arise on your both and for you - so do seek proper financial advise (we are tax experts rather than financial advisers but I would NEVER recommend anyone placing property in a limited copmany.
Plus a UK limited company cannot just own property - there has to be a trade attached - such as it being commercial property or a B & B of Hotel etc
But it could be worth perhaps looking at placing the property in trust maybe ? Bt again you would need to seek financial expert advise on the pros and cons (we merely advise on tax due - not the best way to proceed with investments etc
But it may then serve to protect your interests along the way
Let me know if I can be of any further assistance
Thanks
Sam
Customer: replied 1 year ago.

Hi Sam,

Sorry, I meant that the transfer of the property was to be held in both names personally in the UK and not to be held within a company in the UK.

However, it seems easier, don’t you think, to just transfer the property from my GIB Ltd to my civil partner in the UK? He already pays taxes in the UK, whereas I, being domiciled in Andorra, do not pay UK tax I earn in Spain and Andorra.

Clearly my partner needs then to inform his accountant and HMRC of the property transfer, but am I really obliged to undertake completing a form for the ATED covering the period from April 2015, as it sounds as though I have to get a valuation done and complete paperwork etal? HMRC don’t know me at all. My civil partner never uses my name and declares all his income in his own name, so there has been no benefit of tax allowances used as a couple.

Clearly your good responses have generated more questions from me, so let me know what additional fee I should pay you?

Thanking you again

Regards

Nas

Expert:  Sam replied 1 year ago.
Hi Nas
You can either pay a bonus (of your choice with respect to amounts)Or I can send an additional service request with a price of your choice.
Let me know how you wish to proceed.
Thanks
Sam
Customer: replied 1 year ago.

Hi Sam,

Would it be in order to pay a bonus of £30?

Regards

Nas

Expert:  Sam replied 1 year ago.
Hi Nas
That< acceptable, so when you come to accept my answers (by rating the level of service you feel I have provided) it will allow the option for you to add a bonus.
So lets look at your further questions,
Sorry, I meant that the transfer of the property was to be held in both names personally in the UK and not to be held within a company in the UK.
You then in this instance will NOT be liable to capital gains on your share transferred, as you are making a transfer to your civil partner
BUT I should then advise if the property was to be sold in the future - then you will incur a capital gain liability of profits made from the date of transfer to the date of sale, as this is not your main residence.
However, it seems easier, don’t you think, to just transfer the property from my GIB Ltd to my civil partner in the UK? He already pays taxes in the UK, whereas I, being domiciled in Andorra, do not pay UK tax I earn in Spain and Andorra.
Clearly my partner needs then to inform his accountant and HMRC of the property transfer, but am I really obliged to undertake completing a form for the ATED covering the period from April 2015, as it sounds as though I have to get a valuation done and complete paperwork etal? HMRC don’t know me at all. My civil partner never uses my name and declares all his income in his own name, so there has been no benefit of tax allowances used as a couple.
Whilst HMRC dont know you, the fact that your offshore company falls into the required position for the ATED tax since 06/04/2015 I can only advise (which I am sure you can appreciate) that you must inform them of this fact.
And the transfer/sale will trigger that - but may be negligible.
But I would make that declaration regardless - as its then the end of the matter.
Your partner can inform his accountant (but it would be out of courtesy only) as his then being a part owner in this property which is clearly his main residence would not affect any element of is tax position and if it remains his main residence until sold (at any point in the future) he will not ever incur a capital gain position, Only if he moves out, and any sale or transfer takes place more than 18 months after any move out that takes place would create a capital gain situation. But then all the time he had lived there plus the last 18 months of ownership would form an exemption of his % share of the sale/transfer.
Just make sure a valuation is taken at the time of this initial transfer - and keep this information safe (a copy each for future reference)
Thanks
Sam
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Customer: replied 1 year ago.

Hi Sam,

Could you please clarify again your last paragraph, below, just that I am unclear from what you say is my partners CGT position should his main residence ever be sold? I thought that I had to transfer only into my partner's name to avoid CGT, but from what you say it seems in order to have in both our names, but unclear of CGT position?

Your partner can inform his accountant (but it would be out of courtesy only) as his then being a part owner in this property which is clearly his main residence would not affect any element of is tax position and if it remains his main residence until sold (at any point in the future) he will not ever incur a capital gain position, Only if he moves out, and any sale or transfer takes place more than 18 months after any move out that takes place would create a capital gain situation. But then all the time he had lived there plus the last 18 months of ownership would form an exemption of his % share of the sale/transfer.

Regards

Nas

Expert:  Sam replied 1 year ago.
Hi Thanks for your response - you advised me that"Sorry, I meant that the transfer of the property was to be held in both names personally in the UK and not to be held within a company in the UK." so I have answered on the basis this would be held in joint names - Your partner does NOT need to advise anyone - if its just to be transferred into his sole name, as it currently is his main residence and will be so at the time any transfer takes place and only IF he then was to move out and any transfer/sale did not take place for more than 18 months after he moved out - would there ever be any capital gain position. If you did mean joint names, then please advise and I can clarify that position more clearly for youThanks Sam
Customer: replied 1 year ago.

Hi Sam,

I understand then that providing my civil partner stays in the property for at least 18 months, as this has always been his main residence, then he is not liable for any CGT at anytime on this property?

I was unsure whether to have my name appended to the ownership or not, so owned jointly, when it gets transferred from Gib, as I was unsure of the pros and cons of doing so.

Thanks

Nas

Expert:  Sam replied 1 year ago.
Hi NNas
NO - if your husband says in the property there is NO capital gains at all even if and when sold
IF however your partner moves out (for whatever reason) and any sale takes place or say a transfer back to you and this happens more than 18 months after he has moved out) THEN capital gains will arise as per the normal Capital gains rulingss
I cannot give financial advise as to what you should do, you need to consult and investment/financial broker (which I am sure you can appreciate as I am a tax expert) as the answer this depends on your short and long term considerations
If its asked in relation to tax, please advise what your objectives are with respect to this transaction of transfer
Thanks
Sam
Customer: replied 1 year ago.

Hi Sam,

It was just that I thought there could be CGT involved when I gift the property out of the GIB company into my civil partner's name that it could arise if my name was included on the land registry too as personal joint owners, regardless that we are civil partners anyway. I note what you say that no CGT occurs providing the property is not sold within 18 months of transfer, but this will be fine as there is no intention to sell anyway.

I have arranged a valuation of the property and can see that it makes no difference if my name is ***** ***** the land registry.

Thanks for your help.

Nas

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