Cgt

[landlord1972]

Will I pay Capital Gains Tax if I decide to let my UK
home/property whilst I am living or working abroad? If
so are there ways round this like living in the
property for a month or so every three years?

I have also read on thissite that if the property is owned
by me and my wife I don't have to pay CGT if the value
does not increase above £16,800. Does this mean that
realistically we won't be liable (I am assuming most
properties would not normally rise by more than this
amount)? Also because I will be abroad only my rental
income will be taxed in the UK and this will less than
both our personal tax allowances , probably £4800 pa.
Does this mean I really don't have anything to worry about?

[Tax Accountant]

Will I pay Capital Gains Tax if I decide to let my UK
home/property whilst I am living or working abroad? If
so are there ways round this like living in the
property for a month or so every three years?

I have also read on thissite that if the property is owned
by me and my wife I don't have to pay CGT if the value
does not increase above £16,800. Does this mean that
realistically we won't be liable (I am assuming most
properties would not normally rise by more than this
amount)? Also because I will be abroad only my rental
income will be taxed in the UK and this will less than
both our personal tax allowances , probably £4800 pa.
Does this mean I really don't have anything to worry about?

Income Tax on rental profits:
You need to register with the Inland revenue to complete tax returns whilst non-resident. If you are a British Citizen with no other income in the UK, you will have your personal allowances to set-off against rental profits.

Capital Gains Tax:
If you stay non-resident for 5 complete tax years and sell your property whilst still abroad, there is no CGT.

On the other hand, if you have been using your property as your only or main residence since purchase, you will have exempt period of ownership for all these years plus the final 3 years of ownership. Additionally you may qualify for other periods spent abroad if for employment etc. There is also exemption for period of absence for any reason provided you occupied the property both before and after the period of absence. Any period of ownership not covered by the exempt period is classed as chargeable period. The gain over the whole period of ownership is time-apportioned between exempt period and chargeable period. Any gain apportioned to chargeable period is further reduced by lettings relief, taper relief and annual exemptions.

All in all, there may not be any CGT to pay depending on your personal circumstances due to abundance of reliefs, exemptions and allowances available.

Ramnik

[landlord1972]

Does this mean that there will be no CGT if I occupy the property both before and after my absence. If so how long do I have to occupy it before and after? 1 month, 1 year? Also does the absence have any time limits? Thanks again for your answer.

[Tax Accountant]

Does this mean that there will be no CGT if I occupy the property both before and after my absence. If so how long do I have to occupy it before and after? 1 month, 1 year? Also does the absence have any time limits? Thanks again for your answer.

I assume that you have used the property as your only or main residence since purchase.

You should read HMR&C Help Sheet IR283 and the paragraph headed 'Period of absence'. This states, among other things, that qualifying periods of absences are:

(a) absences for whatever reason, totalling not more than 3 years in all. You are required to return to the property to occupy it as your only or main residence.

(b) absences during which you are in employment and all your duties are carried on outside the UK. You may not return to the property if your existing job requires you to work away again.

(c) absences totalling not more than 4 years when the distance from your place of work prevents you living at home. You may not return to the property if your existing job requires you to work away again

(d) absences totalling not more than 4 years when your employer requires you to work away from home in order to do your job effectively.

The test about occupying the property as your only or main residence is based on actual facts and is not dependent on time, ie it is the quality of residence test and not one of quantity. Having said this, a period of approximately 6 months would normally signify a degree of permanence.

I hope this helps.

Ramnik