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Peter
Peter, Chartered Tax Advisor
Category: Tax
Satisfied Customers: 42
Experience:  Director at PDS Tax Limited
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I transferred 200,000 pounds from a Spanish account to a UK

Customer Question

I transferred 200,000 pounds from a Spanish account to a UK bank account in 2016 (using Transferwire). I paid 16,000 CGT in Spain.
JA: Where are you? It matters because laws vary by location.
Customer: I transferred 200,000 pounds from a Spanish account to a UK bank account in 2016 (using Transferwire), the result of a property sale in Spain. I paid 16,000 CGT in Spain. HMRC is now trying to get me to pay 60,000 income tax. Surely this is not income?I am UK tax resident.
JA: What steps have you taken so far?
Customer: None
JA: Anything else you want the lawyer to know before I connect you?
Customer: No
Submitted: 9 days ago.
Category: Tax
Expert:  Peter replied 9 days ago.

Hi, my name is ***** ***** I am a Chartered Tax Advisor. I am reviewing your query and will reply shortly.

Expert:  Peter replied 9 days ago.

UK residents are subject to tax on their worldwide income and capital gains.

This means that even though you paid tax on the sale of the property in Spain, the sale may also be subject to UK capital gains tax (CGT) rather than income tax. However, your UK tax liability would be reduced by the tax you have paid in Spain so you would not be taxed twice on the same capital gain.

Residential property sold in 2016 is subject to UK capital gains tax at 18% for gains within the basic rate band, and at 28% thereafter. These rates are lower than the rates of tax on income. You are able to deduct the cost of the property, costs of selling the property, and certain improvements you have made to the property from the proceeds in order to calculate the capital gain. You also have an annual CGT exemption of £11,000. If you have ever lived in the property as your main home further reliefs may be available.

At this point my advice to you is to engage a UK accountant or tax advisor to help you respond to this letter you have received from HMRC. This is because:

  • The sale of non-UK properties is complex to calculate correctly making use of all the reliefs potentially available to you.
  • As you have been prompted to tell HMRC about this property, HMRC may try to levy penalties on any underpaid tax and you will need assistance to make a good argument for lower penalties.

I hope this is helpful. If you have any follow up questions, I am happy to help. Otherwise please consider a 5 star rating for my answer.

Expert:  Peter replied 4 days ago.

I hope my answer was helpful. If you have any further queries please let me know.

I look forward to hearing from you.

Kind regards, Peter