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UK and International tax – Part 3 of 5

February 5, 2014

20th December 2013 by Simon Misiewicz

Are you earning money whilst you are living abroad?

Are you earning money from overseas?

The subject of UK and international tax is complex to say the least. As you would expect from having multiple countries tax you at the same time in some instances.

As such we have written a number of articles to help you along.

Part 1: Paying tax in the UK depends on where you live
Part 2: Rental income from property
Part 3: Capital Gains Tax (CGT), UK and international tax
Part 4: Domicile & leaving the UK
Part 5: Double Taxation Agreements (DTA) & IHT

Without further delay let us help you with the complex subject of UK and international tax.

Part 3: Capital Gains Tax (CGT), UK and international tax

If you’re not resident in the UK, whether you pay Capital Gains Tax on UK assets will depend on a number of factors (1)

• 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 (only for tax years up to and including 2012-13) 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

You might have to pay Capital Gains Tax if you sell, give away or exchange an asset you’ve inherited and it’s gone up in value since the date of death. The legal term for the many ways you can cease to own an asset is ‘dispose of’ assets. (In some cases you may be treated as if you’ve disposed of an asset that you still own – for example, if you receive compensation for a damaged antique.)

If the asset you inherited increases in value between the date of the deceased’s death and the date you dispose of it, the increase is a ‘capital gain’. See more on this in the section below, and in the guides on Capital Gains Tax (8).

If you inherit a property from your spouse or civil partner, you’re an ‘exempt beneficiary’ and you normally won’t owe Inheritance Tax as long as you’re domiciled in the UK.

If you owned property jointly as ‘joint tenants’ with the deceased and you weren’t their spouse or civil partner, you may have to pay any Inheritance Tax due on the property when you inherit it.

If you owned property jointly as ‘tenants in common’ with the deceased and weren’t their spouse or civil partner, but inherited their share under the will, the deceased’s executor or personal representative must pay any Inheritance Tax or debts before distributing the estate among the beneficiaries.

If there’s a shortfall, you as the remaining owner are responsible for that shortfall and HM Revenue & Customs (HMRC) and other creditors have the right to approach you.

If there isn’t enough money in the rest of the estate to pay the outstanding tax or other debts, you may need to sell the property.

If you are looking for an accountant or thinking of changing your current accountant because they do not understand property investing then please contact Selina on selna@optimiseaccountants.co.uk to book in your free “Property Finance & Tax Mastery” free one to one consultancy slot.

If you would like further information on property finance and taxation matters then please visit our website www.optimiseaccountants.co.uk, visit us on Facebook https://www.facebook.com/OptimiseAccountants and Twitter https://twitter.com/Simon_Optimise

References:

1. http://www.hmrc.gov.uk/international/tax-incomegains.htm
2. http://www.hmrc.gov.uk/international/residence.htm
3. http://www.hmrc.gov.uk/cnr/hmrc6.pdf
4. http://www.hmrc.gov.uk/international/domicile.htm
5. http://www.hmrc.gov.uk/international/remittance.htm
6. http://www.hmrc.gov.uk/cto/customerguide/page20.htm
7. http://www.hmrc.gov.uk/international/nr-landlords.htm
8. http://www.hmrc.gov.uk/inheritancetax/tax-when-you-inherit.htm



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