How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • Go back-and-forth until satisfied
    Rate the answer you receive.
Ask taxadvisor.uk Your Own Question
taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 6331
Experience:  FCCA - over 40 years experience as a qualified accountant (UK based Practitioner)
54961312
Type Your Tax Question Here...
taxadvisor.uk is online now

I am looking to acquire a UK property with the intention of

This answer was rated:

Hi
JA: Hi. How can I help?
Customer: I am looking to acquire a UK property with the intention of completing refurbishment works, then selling it for a profit I would like to know what tax the profits will be subject to - CGT or income tax?
JA: Which tax year is this for?
Customer: 2019/20 For more background...
JA: Anything else you want the Accountant to know before I connect you?
Customer: Ye Yes

Hello and welcome to JustAnswer. I am here to help you. I am reviewing your question and will respond to you shortly.
Many thanks

Thank you for your question.

If it is your intention to buy a property, refurbish it andthen put it on the market for resale, this activity is deemed one of property development and not property investment. Profit made from sale of property would be chargeable to income tax and not capital gains tax.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 5 months ago.
Hello. I have more information relevant to my question.I am looking to acquire a property in Wales with the intention of completing refurbishment works, then selling it for a profit, ideally within a 6-12 month window. I do not own any properties anywhere in the world. This will be my first property purchase. I am a UK citizen but I am not UK resident - I live and work in the United Arab Emirates. As a result, I am not resident in the UK for income tax purposes.With this information in mind, I would like to know what tax the profits will be subject to - CGT or income tax? Also, will such activity make my income, earned in the UAE, subject to UK income tax, or will that remain exempt given that I will not be living and working in the UK?I look forward to hearing from you. Please let me know if you need any more information from me.Thank you

Thank you for your reply.

You may not be a UK resident for tax purposes, property development activity is regarded as income from trade and income from trade in the UK would be chargeable to UK income tax.

Being a UK National, you would claim tax free personal allowance as it you were resident in the UK.

I hope this is helpful and answers your question.

As you are non resident in the UK, earnings abroad would not be subject to UK taxation.

I hope this is helpful.

Customer: replied 5 months ago.
Thank you. That has confirmed my understanding and is helpful. How would I go about declaring and paying the tax? Would I do it on a self-assessment return at the end of the tax year in which the profits are realised? Are there certain costs that can be offset against the property re-sale price to reduce the profit subject to tax? Is there a particular section of the HMRC Manuals that you can direct me to, please, to look into this in more detail? Thank you

Thank you for your reply.

if you have not filed a tax return in the past and don't have a UTR (unique tax reference) number, then you need to register for self assessment as self employer. You can do that here

https://www.gov.uk/log-in-file-self-assessment-tax-return/register-if-youre-self-employed

As far as offsetting of costs are concerned, the basic principle ia that all costs are allowable provided they are incurred wholly and exclusively for the purpose of business. If you had to travel to the UK to acquire the property for this project then you could charge travel costs as part of allowable expenses. In general, look at this

https://www.litrg.org.uk/tax-guides/self-employment/working-out-profits-losses-and-capital-allowance/what-business-expenses

I hope this is helpful and answers your question.

If there are no more issues, I will appreciate if you would kindly rate my service positively/accept the service I have provided to ensure I get credited for it by Just Answer.

taxadvisor.uk and other Tax Specialists are ready to help you
Customer: replied 5 months ago.
Thank you. I think that answers all my queries for now. Thanks. I will rate your service now.

I thank you for accepting my answer.

Best wishes.