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Sale of overseas home on return to UK

Sale of overseas home on return to UK

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A client was overseas for several years, then returned in early 13/14.  They had a home in the UK and a home overseas.  Therefore I have used Case 4 to determine they were non-UK resident until they met the 'only home' condition by selling the overseas home.

My question is, given the client is non-UK resident until "the day before the earliest point at which you meet the only home test" and then UK resident from the following day, doesn't that mean that they will ALWAYS be liable to UK tax on the disposal of the foreign home?

As in, they sell the foreign home on 01/05/13 so meet the 'only home' test on that date.  The day before that is therefore the last day they were non-UK resident, therefore they were UK resident when they sold the overseas home.

Sorry if this is painfully obvious to all but me, it just seems like a bit of a trap, that the event that brings overseas income into charge in the UK is the disposal of an item giving rise to tax.

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By Steve Kesby
20th Aug 2014 10:45

Surely...

... they have an overseas home on a day if they had that overseas home at any time on that day.

Presumably when they got up in the morning on the 1st May they still had an overseas home and it was sold by the time they retired for the evening. So the resident part of the split year doesn't start until the next day, meaning that completion took place in the overseas part of the split year.

Not to mention the fact that regardless of where you are in the world you don't just take your house to a boot sale one morning. Presumably the overseas house ceased to be available on completion of a contract that was entered into at some earlier time.

Disposal takes place when the contract becomes unconditional for CGT purposes.

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By Manwithnoname
20th Aug 2014 10:52

Ok

Perhaps I have been a little overzealous with the "the day before the earliest point at which you meet the only home test" part, as the earliest point would be 14:55pm on the 1st of May when completion occurred, which I took to mean that that then created the first day of residence in the UK.

I felt that was a little evil, so hoped I was wrong, and it appears I am :)

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