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bigduckontax, Accountant
Category: Tax
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My husband and I are both British passport holders. He has

Customer Question

My husband and I are both British passport holders. He has never lived in the uk and I lived in the uk very briefly about 15 years ago. We live and work in central Africa (where we pay tax). We bought a house a few years ago on a expatriate buy to let Morgage. This is not paid off yet. We understand the tax laws have changed recently, what do we need to do in terms of tax?
Submitted: 11 months ago.
Category: Tax
Expert:  bigduckontax replied 11 months ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to be able to help you with your question.
Firstly please tell me the year in which you bought your UK house. Also in which African country do you pay your taxes. Once I know this I can advise you further.
Customer: replied 11 months ago.
We started the process in December 2012, but the sale only went through mid 2013
Expert:  bigduckontax replied 11 months ago.
The changes recently announced involve Capital Gains Tax (CGT) to which you will now be liable when and if you sell your property. If you have owned you property for five full tax years before disposal then you are liable to UK CGT on any gain made after an April 2015 valuation. If you do not fulfil this condition then you will be liable to CGT on the full gain. The gain is the difference between the acquisition price and the net selling price. The acquisition price is the purchase price plus acquisition cists, including stamp duty, plus any improvements eg installation of double glazing, central heating, extensions etc. The selling price is net ie after deduction of selling costs. You are entitled to an Annual Exempt Amount (AEA) of 11.1K to offset this gain. As this is a Joint Tenancy the gain is half each and you both have an AEA. Depending upon where you live, if there is a Double Taxation Treaty in place then any tax deducted by the UK will be available as a tax credit against any liability in the other country on the transaction. As you have not told me where you reside I cannot check on any Treaty. There is nothing you need to do UK tax wise until you sell up. However, if you are renting the house out you are liable to UK Income Tax (IT) on the rental [half each]. You do, as EEA citizens, have the usual personal allowance of 10.6K to offset this. If you ever occupied the residence you may be entitled to Lettings Relief (LR) up to 40Kagainst the CGT liability. I do hope that my reply has shed some light on your position.
Customer: replied 11 months ago.
The house is rented out and rental amounts to approximately £7100 per annum. House in in joint name (my husband and I). Even though we are under tax threshold, should we contact HMRS? Our house is rented out by estate agent so we have records of all rentals earned etc
Expert:  bigduckontax replied 11 months ago.
You are well below the IT levels. Your estate agent, as you are overseas owners, is usually responsible for deducting taxes and reporting and accounting for same to HMRC. In any event even HMRC does not wish to waste time processing returns which yield no revenue. If your agent is not conducting these functions for you then a letter to HMRC explaining the situation will almost certainly generate a reply telling you that you do not need to make annual returns.
Customer: replied 11 months ago.
Thanks so much for all your advice Keith, put my mind at ease. Have a good day
Expert:  bigduckontax replied 11 months ago.
Delighted to have been of assistance.
Please be so kind as to rate me before you leave the Just Answer site.
bigduckontax, Accountant
Category: Tax
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Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 11 months ago.
Thank you for your support.

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