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Where Taxpayers and Advisers Meet

How is Capital Gains tax calculated in UK for property sold in India

sugar2010
Posts:1
Joined:Wed Aug 02, 2017 3:27 pm
How is Capital Gains tax calculated in UK for property sold in India

Postby sugar2010 » Wed Aug 02, 2017 3:33 pm

Hi, I am planning to sell a property in India. Price when bought in India in 2005 - INR 25 lacs. Price when being sold in 2017 - INR 70 lacs. Indexed price of the property in 2017 - INR 55 lacs. The long term CG calculated in India - INR 70 lacs - INR 55 lac = INR 15 lacs. The tax @20% = INR 3 lcas.

Now how will the CG be calculated in UK ? Is the CG calculated as INR 15 lacs converted to GBP and then £11000 CG Relief added ? or will CG be calculated in UK as INR 70 lacs - INR 25 lacs = INR 45 lacs ?


The remaining amount taxed at 18% or 28% minus India Tax Relief of 20% as per GTAA.

Thanks

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: How is Capital Gains tax calculated in UK for property sold in India

Postby AGoodman » Wed Aug 02, 2017 6:23 pm

Neither. You need to run a currency conversion on both acquisition and disposal values.

The acquisition cost will be 25 lacs in GBP at the 2005 INR/GBP exchange rate and the disposal would be 70 lacs in GBP at the 2017 INR/GBP exchange rate.

(actual exchanges rates would usually be the rate on the day of the transaction).

Then deduct the annual exemption of £11,000 and multiply the resulting gain by 18% (basic rate) and/or 28% (higher rate) CGT.

Once you have calculated the UK tax, you can deduct the Indian tax paid on the same gain.

Indexing is rarely a feature of UK CGT anymore (it is still relevant to Corporation Tax).

darthblingbling
Posts:698
Joined:Wed Aug 02, 2017 9:09 pm

Re: How is Capital Gains tax calculated in UK for property sold in India

Postby darthblingbling » Thu Aug 03, 2017 10:07 am

Please also make sure you make claim to any expenses that are allowable (converted to pound at the allowed spot exchange rate or average rate for year) and if the property was previously your residence, you may be able to claim PPR and letting relief.

You really should consider having a professional do this for you so you're not overpaying tax or doing things incorrectly.


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