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Residence

Residence

A potential client left UK during 2009/10 to work abroad full time on 5 year contract. In the current year she has disposed of UK property resulting in a loss on one and a gain on the other, leaving gains around £40k. Seems she is caught for UK CGT since not out for a complete income tax year (minimum requirement). If so what are the mechanics for returning this and does she get CGT annual exemption 2010/11. Thanks for your help.

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10th Feb 2011 14:00

Clarification needed

Please clarify:

by "In the current year...", do you mean 2010/11, the year after she left the UK?by "not out for a complete income tax year", are you indicating that she has returned to the UK in 2010/11 without completing her 5 year contract?

Basically:

If she sold the properties before the end of the tax year in which she left the UK, i.e; before 5th April 2010, she would still be liable to UK CGT on the sale of the properties, as split year treatment does not apply to CGTIf she has not been abroad for a complete tax year, she remains UK resident anyhow and would be liable to UK CGT on the sale of the properties.If she is resident abroad for less than 5 complete tax years, she would be liable to UK CGT in the tax year of her return to the UK on the sale of her properties while temporarily abroad.

 

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By vince8
10th Feb 2011 14:15

Residence and CGT

Yes Euan thanks. She left UK 1/3/2010 and has disposed of property in current tax year 2010/11. You seem to agree that UK CGT is payable 2010/11, after deducting AE and presumably if no tax return issued one should be requested.

I think I take your point about split year since she was previously UK resident?

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By vince8
10th Feb 2011 15:09

Question for Euan

I think I'm clear on what to do. If she does not remain NR for 5 complete tax years the gain would be become chargeable in her year of return under S10A TCGA 92. But on the basis that she is NR from date of departure I am proposing to make a white space entry on her 2010/11 return.

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10th Feb 2011 16:34

Eh?

If she left the UK on 01.03.10, she only remains resident in the UK for CGT purposes until 05.40.10.  If she sold the properties in 2010/11 and continues to work abroad until beyond 05.04.11, she will be non-resident and hence, not subject to UK CGT in 2010/11 - there is no need to enter anything on the Capital Gains pages of her 2010/11 tax return.  Indeed, a 2010/11 return would only be required if she had UK source income in 2010/11, such as income from the properties before they were sold.

Yes - if she returns to the UK before 06.04.15, she will be liable to UK CGT in the tax year of her return on the sale of the properties in 2010/11.

I trust that a P85 was filed when she left the UK.

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By vince8
10th Feb 2011 18:05

Euan

I agree but its been suggested HMRC will issue a return for 2010/11 in these type of cases. Only souce of UK income is dividends from quoted shares. Leaving aside the question of whether or not such a return should be completed (which would be subject of another debate) it was thought prudent therefore to put an entry in white space. I now have a copy of P85, which does not ask about UK based assets still held at time of leaving, apart from rental sources.

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