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TonyTax
TonyTax, Tax Consultant
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I am a british citizen of indian origin. i recently sold some

Resolved Question:

I am a british citizen of indian origin. i recently sold some ancestral property in India and have paid capital gains on that in India.
i have 2 questions
(1) do I have to pay any tax in the UK, if so how much and how do I declare that to HMRC.
(2) How can I repatriate the money to the UK, and will I have pay tax at that point
thanks
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi.If you are UK resident and UK domiciled, then you are liable to Capital Gains Tax on income and gains no matter where they are derived from in the world. If you are UK resident and non-UK domiciled, then you have a choice. Either you choose to pay tax on your worldwide income and gains as a UK resident and UK domiciled individual would, in which case you would get credit for CGT paid in India against your liability on the same gains in the UK under the terms of the UK/India tax treaty or you choose to pay tax only on non-UK income and gains that you bring into the UK under the remittance basis of assessment. Take a look at section 5 of RDR1 here for information on what domicile means and at section 9 of RDR1 here for information on the remittance basis of assessment. The UK tax year runs from 6 April to the following 5 April. CGT in the UK is payable on 31 January following the end of the tax year in which the gains are made or, in the case of the remittance basis, on 31 January following the end of the tax year in which they are brought into the UK. As far as bringing the money into the UK is concerned, there are no exchange controls and you can simply arrange an international bank transfer from India to your bank in the UK. Exactly how the Indian banks work is unknown to me but there are internationally recognised procedures and codes that banks follow and use. You would be best advised to start with your bank in the UK and take it from there. They will give you the information you need to pass to the Indian bank which will be sending the money to the UK. You should warn your UK bank in advance of any sizeable transfer into your account to avoid problems with their money laundering procedures. I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.

thank you

I am UK resident and domiciled.

I have paid 20% capital gains in India

does the double taxation treaty apply in my case.?

how is this income consider by UK tax authorities?

is it still considered as capital gains, even though the capital and gains were in India?

If so do I have to pay another 28% CGT here in UK?

don't I at-least get a rebate?

thanks

Expert:  TonyTax replied 1 year ago.
The double tax treaty will apply in your case. See Article 24 here.

If you sell property, the profit you make is a capital gain unless you act as a property developer and build property to sell at a profit, in which case you will be treated as trading and subjected to income tax and national insurance contributions.

I said in my answer that your worldwide gains are taxable in the UK if you are UK resident and domiciled. It doesn't matter where they are made.

If your CGT liability in the UK is £10,000 and you have paid £8,000 in CGT in India, then you will pay £2,000 in the UK.

If your CGT liability in the UK is £8,000 and you have paid £10,000 in India, then you will pay no CGT in the UK. HMRC would not repay any tax to you since they haven't had any. It will all have been paid in India.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15886
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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