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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Dear tax consultant the solicitor handling my divorce has

Resolved Question:

Dear tax consultant the solicitor handling my divorce has suggested I seek expert advice before we put a proposal to the other side prior to the decree absolute. I have been back in the UK for 16 months after living for ten years in France where I was a French tax payer. I have been paying UK tax since April 2015. I received £100,000 from the sale of the French property my husband and I owned jointly and which was our primary residence last August. I transferred this from a French into an English bank account last month (January 2016). Will this money be taxed and, if so, what is the likely bill?
We jointly own a flat which I have lived in since returning to the UK. My solicitor proposes that I give my husband £76,000 and transfer the flat to my name. Will I be lliable for tax on this sum?
Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
If my offer is accepted by my husband, it will be a court order.
Expert:  TonyTax replied 1 year ago.
Hi. Can you tell me exactly when you returned to the UK please. Was the property in France your main home for the entire period of ownership? Was it sold in August 2015? Was it ever let? How long have you owned the UK flat? Was it your main home when you lived in the UK? Was it ever let? Will £76,000 be half the value?
Customer: replied 1 year ago.
I returned to the UK on November 20, 2014.
The French property was our primary residence for the entire period of ownership which was 12 years (2003). It was never let. It was sold in August 2015.
We bought the London flat at the same time - 12 years ago. There were tenants in it for four years until I returned to the UK in 2014 and the rent from that was taxed at source. The £76,000 is not half its value. The deal proposed is that I give him this money and he keeps a big wodge of joint savings plus his pension.
Customer: replied 1 year ago.
Would you prefer to phone me?
Expert:  TonyTax replied 1 year ago.
Let's see how we get on with a written answer first. A phone call will cost more.
Customer: replied 1 year ago.
I've found some more precise details, Tony.
We bought the London flat on May 5, 2005. There were tenants in it from May 2008 to November 2014. Bought the French house in 2005, too. Husband has those precise details and it would be difficult to ask him in the circumstances.I was certainly there during August 2005 awaiting the furniture from the UK.
Expert:  TonyTax replied 1 year ago.
Thanks. I'm assuming that you were non-UK resident for tax purposes. The gain on the French property will be exempt from CGT as it was your main home for almost the entire period of ownership. You are given the last 18 months of ownership as a tax free period even if you were not living there in that period. Take a look at HS283 below for more information on CGT and the main home: https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief If you give your husband £76,000 as part of the divorce settlement in return for his share of the UK property, you won't have any tax to pay until you sell it if that ever happens at all as you aren't selling anything, your husband is. If the transfer occurs in the tax year of separation it will be done on a "no gain, no loss" basis and no CGT will be payable. If the transfer occurs before the Decree Absolute, then it will be deemed to have taken place at the open market value as you will read here. That may lead to your husband having a CGT liability. If it occurs after the Decree Absolute, then your husband will be treated as having sold his share to you for £76,000 only. That would be good for him assuming £76,000 is less than half the market value but not necessarily for you as it will leave you with a lower base cost for CGT purposes. I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
In regard to 'If the transfer occurs in the tax year of separation it will be done on a "no gain, no loss" basis and no CGT will be payable'. Since we did not legally separate but went straight into divorce proceedings, would this be applicable as it would be best for both of us?
However, if this does not apply, I understand it is in my best interests to get this settlement before the decree absolute.
I don't want to continue paying legal fees if this 'lower base cost for CGT' does not amount to much. As I do not want to sell the property, why would this be relevant?
Expert:  TonyTax replied 1 year ago.
The tax year runs from 6 April to 5 April. If the end of the tax year during which you separated has passed then you cannot do the transfer on a "no gain, no loss" basis. You would have a higher base cost if the transfer occurred before the DA but it would not suit your husband. I told you that you may have CGT to pay if you sell the UK property in the future as it won't have been your main home for the entire period of ownership.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
Thanks.

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