UK capital gains on overseas property disposal
The impacts of the recent non-dom legislation on those who just have relatively small assets overseas. Just wondering whether anyone has any thoughts that might help around mitigation of UK capital gains. Obviously, I'm talking about normal tax avoidance planning not something whizzy. The non-dom has been R/OR in UK for last 10 years.
One property owned but rental income has been less than the £2k de-minimus and unremitted to UK. Therefore no disclosure has been needed on tax returns to date for this. The property is soon to be disposed of, this will create a UK capital gain above the £10k personal allowance threshold, largely due to a big FX gain on the property value. Any thoughts on ways to mitigate appreciated, considered the following:
1/ Transfer portion to spouse (UK Citizen, R/OR & domiciled) to use their allowance -> good for UK but unfortunately Malaysia doesn't allow foreign ownership of properties below RM500k -> I can't think of a way to get part of gain to spouse without change of title?
2/ Transfer portion to friend / family member and sell -> caught by UK connected person rules / selling at under-value so not effective.
3/ UK - Malaysia tax treaty -> unfortunately this does not appear to give exclusive taxing rights to the state where the property is physically located.
Proceeds - MYR divided by exchange rate on date of sale
Base cost in MYR divided by historic exchange rate on purchase (was while R/OR in UK - so seems to be this value)
& Capital improvements in MYR divided by historic exchange rate when made
As the MYR currency has appreciated against GBP a lot of the gain is due to FX. I think there was some talk about being able to calculate gains net and then translate this which would give a big benefit. However, I think this was just talk and has not made it onto the statute books. Anyone know of any HMRC concessions that might help?
Some of gain is going to be gifted to charity in the same country. If this were in the UK the charitable gift would qualify for deduction from UK tax. Any argument to be had that this should apply here, worth a punt with lots of disclosure? Any other ideas?
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