Selling property in Bangladesh, bringing money to UK. What's the process?

[Traveller75]

My husband owns property in Bangladesh jointly with his elder brother. They are thinking to sell the land worth around £3million. They will divide the proceeds of the land with 5 other siblings who reside in Bangladesh before bringing the rest of the money to the UK. They have owned this land for many years but haven't received any income as any rent was taken by the siblings residing in Bangladesh managing the property.

1. When they bring their share of the proceeds to the UK will they have to pay capitals gain tax on the entire amount of the sale as the property is in their names only or just their share that they bring to the UK?
2. They will have also payed tax in Bangladesh, can this be deducted from the capitals gains tax in the UK?
3. What is the process in declaring the income to pay the tax?

[jerome.lane]

Unless a valid claim for the remittance basis is made and proceeds not remitted, a UK tax resident will be liable to capital gains tax when they dispose of assets anywhere in the world, not just when they bring the proceeds to the UK.

Any tax paid overseas on the disposal should be capable of being offset against any UK liability. You should also seek professional tax advice as there may be a tax treaty between the countries that deals specifically with how the property is taxed; this can result in tax only being due in one country.

If your husband is already within self assessment, he should report the disposal on his tax return. Otherwise, HMRC do offer a report and pay online service or you can just write to them.

If the other brothers are not documented as either legal or beneficial owners, then it will be difficult to show that the proceeds can be split 7 ways rather than 2. Technically, it would appear more akin to gifts being made from the proceeds.

There are potentially also income tax issues, so it would be important to ensure the arrangement is properly documented. I would assume there is some sort of documented agreement.

[AGoodman]

Definitely a case where you should get an accountant on board to help you.

[Traveller75]

Hi Both.

Thanks for your responses. It is clear now that:

1. We will pay CGT regardless of if/when we bring money to the UK.
2. The tax will be on the whole amount as the siblings are not legal owners. (Seems unfair but makes sense)
3. We should be able to offset the tax paid abroad (pending reviewing any Tax treaty between Bangladesh and the UK)
4. We will need to hire a accountant to help us through the process.

Given we have to pay on the whole amount as soon as the sale has gone through can we pay the tax directly from the bank account in Bangladesh??

There is a possibility for the buyer to pay part of the sum in the UK and part in Bangladesh if this makes it easier.

[jerome.lane]

1. Not necessarily!
2. Same as 1 - the siblings might be beneficial owners!
3. Correct
4. Happy to help on a paid basis!

Good luck

[Traveller75]

Thanks for your help. We may be in touch if the property sells

[jerome.lane]

Nothing like shutting the barn door after the horse has bolted! You should confirm the position first really...