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TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have been living in the uk past 10 years where I have been

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I have been living in the uk for the past 10 years where I have been paying tax.
When I was living and paying tax in Uganda, I purchased a house in South Africa out of the proceeds of the sale of my property in Uganda.
I now am considering selling the property and sending the proceeds to my account in the uk in order to purchase a property here.
Please advise the tax implications. Do I need to pay tax on it and how do I calculate it.
Thank you.


What nationality are you? Can you tell me if you ever lived in the South Africa property and, if so, for how long. Has it been let at all? If so, for how long? What did it cost to buy? How much is it worth now?

Customer: replied 1 year ago.
I am British but I have a British and South African passport. I have never lived in the South African property. My parents live in it and it hasn't been let. It cost ZAR 2.3 million (£122,720) to buy and am selling it for ZAR 4 million (£213,422). My father and I between us have spent ZAR 750,000 (£40,000) on renovations.


Leave this with me while I draft my answer.

You should at section 5 of RDR1 here for the definition of domicile.

If you are UK domiciled, you are taxable on your worldwide income and gains with credit being given for foreign tax paid against the UK tax liability on the same income or gains. If you are not UK domiciled, you have the option to use the remittance basis of assessment which you can read about in section 9 of RDR1.

The gain will be about £70,702 (£213,422 - £122,720 - £20,000) if you take half the renovation costs into account. The first £11,100 will be tax free leaving you with a net taxable gain of £59,602.

There are two rates of CGT for residential property, 18% and 28%. The rate or combination of rates that you will pay will be dependent on the level of your income in the tax year you sell the property. In 2016/17, the current tax year, no more than £32,000 of the net taxable gain can be charged to CGT at 18%. If you let me know how much you earn, I will calculate the CGT for you.

I hope this helps but let me know if you have any further questions.

Customer: replied 1 year ago.
hi thanks. I was made redundant in February so am not sure how much I will earn this year. Part of my redundancy payment was made in this tax year (May) - approx £20,000.
I would say that I am domiciled in the UK. I don't own a home in the UK - I rent. Not sure if that helps?
Also my husband is American. I have not gone for an American passport as yet, as I don't want to end up paying tax in both countries. Would it be more tax efficient to transfer the money to our American account instead and buy in the States?

If you are UK domiciled, the gain will be taxable in the UK regardless of where the money ends up.

If your only income in 2016/17 is £20,000 (I'm assuming the £30,000 exemption for redundancy was used in 2015/16) and you sell the property in that tax year, then £23,000 of the net taxable gain will be taxed at 18% and the balance of £36,602 will be taxed at 28%. The CGT will be £14,388.56. Any CGT you have to pay in South Africa will be deductible from the UK tax liability.

Customer: replied 1 year ago.
Many thanks. Is there any reason why you have worked out the improvements made at half the value?

You said your father contributed towards the total. By all means, claim the whole £40,000. HMRC may ask you to prove the improvement expenditure.

Customer: replied 1 year ago.
Ahh ok! Thanks very much!


Would you mind rating my answer before you leave the site please.

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Customer: replied 1 year ago.
sure, many thanks!