Transferring money back to UK from UAE

by **Ajnabi** on Mon Nov 17, 2008 7:20 pm

Hi,

I am a UK resident and thinking of investing in Tax free Dubai by buying a property down there. Therefore I am thinking of transferring £100,000 by re-mortgaging my house in the UK.

If I send £100,000 to the UAE, and some time in the future, in a few years sell my property in the UAE for £200,000 and transfer back the original £100,000 back to the UK so that I can pay off my mortgage, will I still incur CGT on the £100,000 because this is the original sum I sent abroad in the first place?

Will I also incur CGT on the £100,000 profit I made in the UAE, if I was to leave it in an UAE bank?

I am thinking of doing this due to the property slump in the UK, and the booming property market in the middle east.

I am based in London, and thank you for any help in advance.

by **maths** on Mon Nov 17, 2008 7:31 pm

You do not indicate your domicile status for UK tax purposes.

If your are UK domiciled then CGT will be payable on any capital gain made on sale/gift irrespective of location of monies.

If you are non-UK domiciled then any capital gain on sale is subject to CGT but only on remittances of monies to the UK. Thus if all monies from the sale were left outside the UK no CGT charge would arise.

If however on your figures you bought for £100K and sold for £200k making a capital gain of £100K then on remitting £100k all of this amount would be treated as capital gain and an 18% tax charge would arise. Splitting of "capital" from the "capital gain" is not possible.

by **Ajnabi** on Tue Nov 18, 2008 1:11 pm

Hi,

Thank you for your reply. I am UK domiciled, and pay higher band (40%) tax on my income. Would this also affect my CGT liability ?

Therefore from my understanding, transferring the same amount of money from UK to abroad and back again, will incur CGT. Would this still be the case even if I didn't make a profit of £100,000 abroad?

Also, are you an accountant, if so, please could you give me your details.

Many thanks.

by **maths** on Tue Nov 18, 2008 4:18 pm

As a UK resident and domiciled individual you are liable to CGT on worldwide capital gains.

Movement of monies is irrelevant.

If you buy an asset in Dubai for 100 and sell for 150 you are liable to CGT on the 50 gain; buy for 100 and sell for 100 then no gain and no CGT; buy for 100 and sell for 75 you have a capital loss of 25 and thus no CGT.

From 6th April 2008 the CGT rate is 18% irrespective of the fact you are a 40% taxpayer re income tax.

by **Ajnabi** on Wed Nov 19, 2008 6:02 pm

Hi,

Many thanks your a star...

For the clarification and my understanding, because I am UK domicile, and make 50 profit, and leave all of the 150 abroad for future investments abroad, I am still liable to CGT on the 50, even if I don't remit back to UK?