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bigduckontax
bigduckontax, Accountant
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My client lives in France, and has previously notified

Customer Question

Hello my client lives in France, and has previously notified the UK tax office of his non-residence. He has just sold a property in the UK, which had been rented out (and the rental income had been declared to the UK HMRC prior to the sale of the property). I am wondering if you can clarify the Capital Gains Tax situation, i.e. is there a liability in the UK, or is there a liability in France?
Submitted: 10 months ago.
Category: Tax
Customer: replied 10 months ago.
Hello I have been waiting one day for a response.
Expert:  Nicola-mod replied 10 months ago.
Hello,
I'm afraid we do not have any French Tax professionals on the site; however I can transfer this to the Tax section in the hope that someone will be able to help with the UK element of your question.
Please let me know how you'd like to proceed,
Nicola
Customer: replied 10 months ago.
Yes please help me with he UK element - i.e. does the individual have to declare this transaction to the UK HMRC?
Expert:  Nicola-mod replied 10 months ago.
Hello,
We will continue to look for a Professional to assist you.
Thank you for your patience,
Nicola
Expert:  bigduckontax replied 10 months ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.
I cannot assist you with French taxation save in very general terms [see below]. French taxation is so complex and in such a constant state of flux that the employment of a local professional is essential. However under the Double Taxation Convention between the UK and France any capital gain can only be taxed in one jurisdiction. This is achieved by means of tax credits, the tax paid in one country being allowed as a tax credit against the liability in the other. The Convention does not, however, protect from differences in rates of taxation.
The gain made by your client is liable to UK Capital Gains Tax (CGT). If he has been non resident in the UK for five whole tax years prior to the date of sale then he is only liable for the gain made from an April 2015 valuation. Otherwise he will be liable to CGT on the full gain less his Annual Exempt Amount (AEA) [currently 11.1K]. Furthermore, if he occupied the dwelling as his sole or main domestic residence before he rented it out he will be entitled to Lettings Relief (LR) also. LR is available up to 40K.
Here is a quick summary from FrenchProperty.com:
'If you become permanently resident in France, and then subsequently sell your former home or other property, you could become liable for French capital gains tax on the sale proceeds.
Whether you are liable will once again depend on the terms of any double taxation treaty between France and your home country.
In the case of former residents of the UK resident in France a tax treaty signed between France and UK, operative from 1st January 2010, makes you liable for capital gains in France on the future sale of your former home.'
By the by, AEA is available in the first case I mentioned. I do hope that you have found my reply of assistance.

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