CGT on sale of property abroad

[sober]

My parents were resident abroad for a number of years (25+ years) before settling back in UK about 10 years ago. recently they had to go back to sell their home (their only residence), farmland and a holiday cottage abroad, and plan to bring the proceeds to UK. I was wondering if they will need to pay any tax (CGT etc) on the funds they remit to UK. In UK they live in a rented accomodation (a bungalow, due to their age) and only own investment property (a 2nd floor flat) which they rent out.

Also, if what they invest their money in, will make any difference to their TAX situation - e.g
buying another investment property in UK,
or buying a property to live in,
Alternatively if they gave some of the money to my sister for her to buy a house for herself, which they could live in it as well.
or simply help her buy a flat and buy a small bungalow for themselves.

I realise there are a number of "what if" scenraios, however I will be grateful for any views or sharing of similar experience.

[Tax Accountant]

My parents were resident abroad for a number of years (25+ years) before settling back in UK about 10 years ago.

Recently they had to go back to sell their home (their only residence), farmland and a holiday cottage abroad, and plan to bring the proceeds to UK.

I was wondering if they will need to pay any tax (CGT etc) on the funds they remit to UK. In UK they live in a rented accomodation (a bungalow, due to their age) and only own investment property (a 2nd floor flat) which they rent out.

Also, if what they invest their money in, will make any difference to their TAX situation - e.g buying another investment property in UK, or buying a property to live in.

Alternatively if they gave some of the money to my sister for her to buy a house for herself, which they could live in it as well or simply help her buy a flat and buy a small bungalow for themselves.

I realise there are a number of "what if" scenraios, however I will be grateful for any views or sharing of similar experience.


Any person who is resident and ordinarily resident in the UK is chargeable to all UK taxes on their worldwide income, gains and assets.

There is no direst tax on any money brought to the UK from abroad.

However, they should investigate if they have declared any income or capital gains tax due to the overseas authority during the past 10 years whilst they have been resident in the UK.

They may also have been liable to declare in the UK their income and gains from investments abroad during the past 10 years, subject to claiming any relief due for overseas tax suffered on the same income and gains.

When they die, they will be charged to UK Inheritance Tax on their worldwide assets, assuming they are domiciled in the UK. Therefore, the proceeds from sale of the assets abroad will be caught to IHT when they die regardless of whether they are brought to the UK or not.

They had a home abroad and they should investigate if this is wholly or partially exempted from UK CGT under Private Residence Relief (PPR relief).

I consider it unlikely that they will have any credible options for re-investment relief to mitigate any UK Capital gains Tax liability.

They may be able to mitigate their UK Inheritance liability if they choose to give away their assets in excess of £285,000 each, and survive for another 7 years.

It is clear that they need to seek professional advice urgently to review all aspects of their taxation exposure to the overseas authority as well as to the UK authority.

Ramnik

[sober]

Thanks Ramnik for your reply

Any person who is resident and ordinarily resident in the UK is chargeable to all UK taxes on their worldwide income, gains and assets.

There is no direst tax on any money brought to the UK from abroad.

However, they should investigate if they have declared any income or capital gains tax due to the overseas authority during the past 10 years whilst they have been resident in the UK.
There has been no income for them from these in the past 10 odd years - just expenditures maintaining and keeping squaters away. Gain on Private residense is free of CGT there. Gains on Farmland is not taxable, local taxes are paid from let portions but much of it was lying idle. Cottage is the only one CGT chargeble asset there.

They may also have been liable to declare in the UK their income and gains from investments abroad during the past 10 years, subject to claiming any relief due for overseas tax suffered on the same income and gains.
The only foreign income is pension - fully declared here. CGT wise - although cottage has trippled in value, but so has the £ - giving hardly any gain if counted in £ terms - can they elect which currency they count their gains in for UK tax purposes?


When they die, they will be charged to UK Inheritance Tax on their worldwide assets, assuming they are domiciled in the UK. Therefore, the proceeds from sale of the assets abroad will be caught to IHT when they die regardless of whether they are brought to the UK or not.

Thanks - good point - didn't realise that !

They had a home abroad and they should investigate if this is wholly or partially exempted from UK CGT under Private Residence Relief (PPR relief).

Is Inland revenue the best place to start?


I consider it unlikely that they will have any credible options for re-investment relief to mitigate any UK Capital gains Tax liability.

They may be able to mitigate their UK Inheritance liability if they choose to give away their assets in excess of £285,000 each, and survive for another 7 years.

It is clear that they need to seek professional advice urgently to review all aspects of their taxation exposure to the overseas authority as well as to the UK authority.

Totally agree - but it does take some effort and some awareness of grounds of justification to gently persuade them to consider wider implications - as you pointed out.

Thanks,
Regards
Sober

Ramnik

[Tax Accountant]

The only foreign income is pension - fully declared here. CGT wise - although cottage has trippled in value, but so has the £ - giving hardly any gain if counted in £ terms - can they elect which currency they count their gains in for UK tax purposes?

Currencies are normally converted at the rate prevailing on the day that a transaction has taken place.
Regular income such as rents are normally converted at an average rate prevailing during the relevant tax year.

They had a home abroad and they should investigate if this is wholly or partially exempted from UK CGT under Private Residence Relief (PPR relief).
Is Inland revenue the best place to start?

I don't think so. Seek professional advice.

Thanks Ramnik for your reply
Good luck.


See replies in red above.
Ramnik