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Selling, transferring properties and Tax Planning – Part 5 of 5

September 24, 2013

Posted by Simon Misiewicz on 19th September 2013

Are you looking to sell properties in the future?

Are you thinking about passing your property onto a loved one?

Here are the 5 keys to Asset planning

  1. Selling Properties As A One Off & Capital Gains Tax (CGT)
  2. Selling properties as a trade (Income tax V Corporation tax)
  3. Using trusts and inheritance tax planning
  4. Transferring assets between spouses
  5. Residency / Domicile – UK & International tax

So without delay let us get into Part 5: Residency / Domicile – UK & international tax

If you are not UK resident you might still have to pay UK Income Tax and Capital Gains Tax on your UK income or capital gains. The rules are the same whether you became non resident when you moved from the UK to live or work full time abroad, or whether you have always been based abroad but have UK income or gains.

Where there is a double taxation agreement between the UK and your country of residence, you won’t normally have to pay tax twice on the same income (1).

There are three considerations to bear in mind:

  • if you have previously lived in the UK, and if so, when you left the UK, the period of time you were resident in the UK before your departure and the length of time you live abroad
  • whether you are still ordinarily resident in the UK – that is, your normal home is the UK
  • whether the assets are held for the purpose of carrying out work through a UK branch or agency

Tax tip:

If you’re not resident in the UK, the country you live in might want to tax you on your worldwide income – even if tax is due in the UK. But if it has a double taxation agreement with the UK you won’t normally have to pay tax twice on the same income (2).

Example:

Mr Smith, who has lived all his life in the UK, left the UK on 25 March 2009 for a contract of employment abroad. He returned to the UK and resumed residence in the UK on 2 February 2013.

He realised a chargeable gain (on an asset acquired before he left the UK) of £35,000 on 15 September 2009. He has resumed UK residence in 2012–13 (the year of return) there is a period of less than five complete tax years (here the years are 2009–10, 2010–11 and 2011–12) immediately before the year of return where he was not resident in the UK he was resident in the UK for at least four out of the seven tax years immediately prior to his year of departure (in this example, in fact, all seven).

Mr Smith will be chargeable under Section 10A TCGA 1992 in the tax year of return to UK residence (2012–13) on the gain of £35,000.

For more information please contact us on 0115 946 1991 or Click Here To Email

References:
(1) Tax on UK Income or Capital Gains for Non-UK Residents
(2) Double Taxation Agreements – An Introduction



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Telephone: 0115 939 4606
Email: simon@optimiseaccountants.co.uk