CGT Foreign property bought before arrival in UK

[shimma]

I am an Italian citizen and was resident in Italy until 2011 when I moved to the UK to become resident here. In 1996 I had purchased a property in Italy to be used as my home. It remained my home until in 2003 I bought another property in Italy which then became my principal residence until I moved to the UK in 2011, but I also kept the first property I had purchased and used it occasionally.
I eventually sold this first property in 2016, when I was resident and domiciled here in the UK. I am trying to work out if I will need to pay Capital Gains Tax but am struggling to understand how I should calculate this. If I use the rules suggested by Bentley v Pike I should convert the purchase price on the date of the acquisition and then do the same to the sale price to start the calculation of the capital gain. The problem with this is that, due to the exchange rate fluctuation, I have a much larger gain in sterling than I have effectively had if I leave the calculation in euros. I understand there is application of PRR for some of the period of ownership, but as this property was a second home for more than half of the ownership I would still have a large capital gains tax to pay. My case though I find different to Bentley v Pike in that when I bought the house in Italy in 1996 it was a long time before moving to the UK and becoming resident here, so at the time of acquisition I was using my money I had earned in Italy, no money from this country was used or eschanged.

I would be grateful for any indications you can give of similar cases and whether I will need or not to perform the calculation in this very penalising way. I'm happy to provide more details if necessary.

[AGoodman]

I'm afraid I think your first analysis is the correct one - ie converting the price to sterling on the days of the acquisition and disposal. This will create a much larger sterling gain but presumably the theory that is as a UK resident, sterling will be your main operating currency. I can see that this could create an unfair result in your situation but I don't think there is an alternative.

[maths]

Bentley v Pike applies.

It would seem that roughly 8.5/21 of the sterling gain is exempt from CGT with a further £11,300 (or £11,100) also exempt.

Any Italian tax (if any) is creditable against any UK CGT charge.

If sold pre 6 April 2016 (ie tax year 15/16) the gain should have been declared in 15/16 tax return ie on or before 31.1.17.