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TaxRobin
TaxRobin, Tax Consultant
Category: Tax
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Experience:  International tax
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My father died in Portugal fifteen years ago. He left s

Resolved Question:

My father died in Portugal fifteen years ago. He left his house to my 2 sisters and myself with a life interest for my mother. In May 2014, we had to bring my mother back from Portugal through ill health. For 5months she lived with my sister. My mother paid for carers 3x a day and had an attendance allowance. From September 2014 she has self funded herself in a care home but from this Sept her savings will be at the level where she will not be paying the full amount for the home and the local Council will be paying a contribution to her care whilst at the same time taking both her private and state pension. My sisters and I intend to pay the difference which could amount to £500 per week!
The house in Portugal has now been sold and in Portugal we will have to pay 28% capital gains tax.
One of my sisters lives in Portugal so pays tax there. I am retired and my younger sister retires this year but we both live in England. We have considered leaving the money in Portugal and paying the fees from there, obviously incurring exchange costs.
My question is this, will we have to pay more capital gains tax in the UK?
Submitted: 1 year ago.
Category: Tax
Expert:  TaxRobin replied 1 year ago.

Hello

The tax treaty between the 2 countries states the following:

Article 13 Capital Gains

(1) Gains from the alienation of immovable property, as defined in paragraph (2) of Article 6, may be taxed in the Contracting State in which such property is situated.

(2) Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing professional services, including such gains from the alienation of such a permanent establishment (alone or together with the whole enterprise) or of such a fixed base, may be taxed in the other State.

(3) Notwithstanding paragraph (2) of this Article, gains from the alienation of ships and aircraft operated in international traffic and movable property pertaining to the operation of such ships and aircraft shall be taxable only in the Contracting State of which the alienator is a resident.

(4) Gains from the alienation of any property other than those mentioned in paragraphs (1) and (2), shall be taxable only in the Contracting State of which the alienator is a resident.

Yes the UK CGT would apply but on the gain after your allowances.

You are allowed a relief from Double Taxation in the UK based on the amount you pay in Portugal.

Customer: replied 1 year ago.
This is not a plain English response. Why can't you put the article into terms we can properly understand. Also what allowances do you mean? Just our usual £10000 tax allowance? As the money is paying for my mothers care, are there any tax allowances for this? Did you really understand our problem?
Customer: replied 1 year ago.
What is double taxation?
Expert:  TaxRobin replied 1 year ago.

Double taxation is when 2 countries tax you on the same amount of income.

Expert:  TaxRobin replied 1 year ago.

If you sell a property over seas you will be taxed in the UK if you get more for the property than your cost in the property (in your case the value when you received it from your father).

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