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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15917
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I wonder if you could help me with the following. I

Resolved Question:

Hello,
I wonder if you could help me with the following.
I was given a flat in Poland 6 years ago which is now worth around £50000. For the past 5 years I have been living & working in the UK while the property was rented. I don't own any other properties apart from that flat and a small forest plot in Poland worth around £5000.
I would now like to sell it and buy a property to live in UK. As far as I know I do not need to pay tax in Poland at all as I have owned it for over 5 years.
My question is: what will be the tax I need to pay in UK if I sell it.
Thanks
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. You will have to pay CGT if you sell the Polish property and bring the funds into the UK assuming you are not a UK national. The gain will be calculated by taking the disposal proceeds and deducting from them the costs of selling the property and the value of the property when it was given to you. The value of the property when it was given to you is your "cost" for Capital Gains Tax purposes. The first £11,100 of your gain will be tax free. The balance will be taxed at 18% or 28% or a combination of the two rates depending on the level of your income in the tax year you sell it. Take a look here for information on CGT. I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
Sorry but I'm confused about the calculation of the tax due to the UK revenue, not sure what disposal proceeds are?
Could you please tell me what do I need to pay assuming that:
- I'm a Polish national but a resident in UK since 2011 (the property was given to me in 2010)
- The property at the time it was given to me was worth £30000
- The property will be sold for £50000
- For simplicity let us disregard the cost of selling as these will be negligible in Poland
- Based on my income in UK I will qualify for the basic rate only, i.e. 18%Another question is how is the value of the flat estimated for the purposes of taxation (value 6 years ago). I'm guessing today’s value will be the price I will be paid minus all costs.ThanksMarzena
Expert:  TonyTax replied 1 year ago.
Disposal procceds are what you sell the property for, £50,000 in your case. If you make a profit of £20,000 (£50,000 - £30,000), the first £11,100 will be tax free due to the annual CGT exemption so you will be left with a net taxable gain of £8,900. The CGT will be between £1,602.00 (18%) and £2,492.00 (28%). As you say, you will be a basic rate taxpayer, you will pay CGT at 18%. HMRC may not ask you to prove how much the flat was worth 6 years ago but they might. If they do, you will need to tell them how you arrived at the £30,000 figure. A local valaution or two would suffice. Whatever you sell the property for now is not going to be in dispute.
Expert:  TonyTax replied 1 year ago.
I have to go out but will be back in about 30 minutes to answer any follow up questions you may have.
Customer: replied 1 year ago.
Amazing, thank you, ***** ***** more thing to clarify, please:If my regular annual income is £40,000 per annum and as a consequence I normally qualify for the basic rate, the taxable gain that you have calculated above (£8,900) will be added to that sum in the year I sell my flat and so I will pay 18% on £3000 and 28% on the remaining amount above the basic rate threshold (£5900)?
Expert:  TonyTax replied 1 year ago.
That's correct.
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