Capital Gains and Residency

[IanT]

My wife and I bought a chalet in France in 2000. In October 2002 we moved to France and became self-employed residents there running a holiday business from the chalet. We had expected to stay in France for at least 5 years but in fact decided to sell the chalet and return to the UK this summer.

We sold the chalet on July 20 and returned to our house in the UK that we had been renting out. The tenants moved out on July 20 and we moved in a few days later.

My query is that I'm uncertain as too whether we will be liable to pay any UK CGT on the sale of the chalet.

I consider that we were resident in France at the time of the sale (certainly we were paying taxes and social charges up to the date of the sale of the chalet when we were considered to have ceased trading in France according to our French accountants).

However, will the UK authorities base CGT on the whole tax year (for which we will be considered resident in the UK)?

We were physically present in the UK at the time of the sale so will this be considered as the beginning of our return to residency in the UK?

[Taxbar]

As you bought the chalet whilst still UK resident and have not spent 5 full tax years abroad you are liable to UK CGT.
You will of course get full credit for any French CGT paid. As this is at a lwer rate than UK CGT you will still have a liablilty.

On the income tax front, as you have spent a complete tax year abroad you should not have a liablilty,but you need to claim split year tax treatment.

its a complex area and you need good advice.

Daniel Feingold
Strategic Tax Planning
e-mail:info@stratax.co.uk