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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4416
Experience:  FCCA FCMA CGMA ACIS
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I am preparing the 2014/2015 self assessment.My client

Customer Question

I am preparing the 2014/2015 self assessment.My client has just informed me that he became non resident 5.4.2014, so for 2014/2015 he is a non UK resident. He has resided in Spain for several years now, with family and children all going to a spanish school. He remained a UK resident purely because his work was with a UK employer and his total days to UK per annum automatically qualified him as a UK resident. Now his employment has ceased August 2014 and he only spent a total of 30 days in the UK, half of which were workdays he is no longer a UK resident and would be deemed a spanish residentI am aware that he does not need to report any capital gains on shares disposed of in UK companies, unless he return within five years of leaving. This will be reported in Spain. (their CGT rates are higher, but he is aware of this)However i am not clear on the best advice regarding the disposal of a residential property - once his main residence - As this disposal was before 6.4.2015 it does not need to be reported. It was the main residence for the bulk of ownership, but was let out for approx 5 years to 31.3.2014, it was then empty until sold October 2014. As a UK resident, he would apply the PPR and the Letting relief, which would wipe out any capital gain, so no reporting required.However if he is claiming non residency for 2014/2015- does he have to report the disposal in Spain and if so, would he be worse off as he looses his PPR and Letting relief?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.
Firstly when he left the UK did he send a Form P85 to HMRC? If he did not then he should do so immediately. Fortunately there is no time limit as to its submission, it is available on the web and can be filed on line. On receipt HMRC will classify him as non resident for the tax year after his date of departure and furthermore split he leaving year into two portions, one resident and the other non resident.
Now how old is your client; this is critical for Spanish CGT purposes?
Customer: replied 1 year ago.
He is 50.
Expert:  bigduckontax replied 1 year ago.
Unfortunate as residents over 65 selling their principal residence of over 3 years are exempt from CGT! He will have to declare this gain for Spanish Tax purposes. I would suggest it be advisable for him to retain the services of a trusted, local professional to steer his case through the Spanish Tax system.
Customer: replied 1 year ago.
Thank you. I am aware of the p85 system. The client has not notifed of his departure I am sure. I will mention this. He has not asked my advice either. He just provided the facts to prepare the tax return due this end of this week! I just didn't feel happy with it and that he could potentially be paying more tax by declaring himself a non U.K. Resident.But Its too late to do the planning now he should have asked the question before disposal or deciding to go non resident. He has no ties to the uk now so I dont think he could even try to declare himself as a uk resident as reading the tax treaty briefly the Spanish authorities would deem him a Spanish resident as he has a permanent establishment there.He made significant gains on his shares too >100k. Spanish cgt is slightly more too!
Expert:  bigduckontax replied 1 year ago.
Yes, it is always the same is it not? They come crying to the adviser when they should have consulted long before. I handled the case of a man who bought a house for his son to live in at uni and the son remained in occupation thereafter. When Dad finally sold it cost him 39K in CGT for the exercise in financial futility!
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.