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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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I am a UK citizen living overseas (Hong Kong). Under a

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I am a UK citizen living overseas (Hong Kong). Under a divorce agreement I am due a capital share of the former marital home. That house is about to be sold.Q. Am I responsible for capital gains tax on my share of the sale ? and if it agreed my ex-wife buys out my share instead of selling the house, am I responsible for capital gains tax - or other such taxation on that money ? I do not plan on returning to the UK to live in the future.

Hello, I am one of the experts on Just Answer and pleased to be able to help you with your question.

Is this house being sold in the tax year of the divorce?

Customer: replied 11 days ago.
My decree absolute was issued in 2011 or 2012 (i cant recall which offhand). I have been living in HK since 2008. I anticipate the house to be sold or I accept a buyout from my ex wife for the value of my share within this year !

For the last 18 months of ownership you are deemed to be in residence even if this is not the case and Private Residence Relief (PRR) is extended. Work out in months the time from separation, say 84. and adjust by 18. Now 66 / 84 is say 78% so that proportion of the gain, less your Annual Exempt Amount (AEA) of 11.7K, will be taxed at 18% or 28% or a combination of the two rates depending on your UK income including the gain in the tax year of disposal.

I do hope that you have found my reply of assistance.

Customer: replied 11 days ago.
Thank you. To be honest that sounds confusing. I havn't paid any UK tax for over 10 years with no UK taxable income. All my taxes are paid in Hong Kong for normal income.I read on the government site that if the individual does not return to the UK for a minimum of 5 years after the sale of the house (for want of another expression) then they are exempt altogether ? So why is that not the case here?

No, it is not; if your have been non resident for over 5 years then your CGT liability is limited to the gain from a 6 April 2015 valuation, less your AEA.

When you left for HK did you complete a Form P85 and send it to your tax office?

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Customer: replied 11 days ago.
I'm not entirely sure what a P85 form is, but i did correspond with the inland revenue at the time I left UK in early 2008 and fill out some forms (I even got a refund on tax prepaid for the year i left). I have had no contact with HMRC since.

It sounds as though it was as a result of a P85 as this form provides for a refund of tax on departure from the UK. It is just that you will find it far easier to deal with HMRC if the P85 process has been undertaken.

Thank you for your support.