CGT liability on selling overseas property and returning to the UK

[baconsarnie]

Hi

We have lived in New Zealand since 2012 and currently own a property here but have not lived in it yet (we have owned it for 3 years), we also own a property in the UK that is rented out. We are looking to return to the UK this year sometime and will return to live in our UK property.

We will sell the NZ property before returning to the UK - will there be any CGT to pay on the gain upon our return to the UK? We will become UK tax residents upon our return.

Many thanks

[maths]

So long as you are not resident in the UK when you sell them no UK CGT.

[baconsarnie]

That's good news, thanks.

Just another question - we will be returning the in the same tax year as we sell it and will become UK resident for tax purposes. We are planning to bring some of the money over - will this be taxed as income?

I have been driving myself mad reading up on tax and CGT on worldwide gains!

Thanks again

[maths]

Just another question - we will be returning the in the same tax year as we sell it and will become UK resident for tax purposes. We are planning to bring some of the money over - will this be taxed as income?

No tax on the monies brought to the UK.

It is important that the sale of the UK property is in the part of the tax year of arrival when you will be treated as non-UK resident. You will need to make sure that the tax year of arrival will qualify for split-year treatment.

I should for clarification have mentioned that I'm assuming you acquired the NZ residence after you lost your UK residence.

I have been driving myself mad reading up on tax and CGT on worldwide gains!

That's sad........but then again so am I.

[baconsarnie]

Thanks for your reply. We have NZ permanent residency. We won't be selling the UK house only the NZ one. We will move back into the UK one.

I will look at split year treatment, I've been looking more at residence status stuff and got myself in a pickle as we won't have been away for 5 full tax years and I'm worried we will be taxed on everything (although obviously tax paid in NZ will be taken into consideration)

[maths]

It is important that the sale of the UK property is in the part of the tax year of arrival when you will be treated as non-UK resident. You will need to make sure that the tax year of arrival will qualify for split-year treatment.

Typo; should have read:

It is important that the sale of the NZ property is in the part of the tax year of arrival when you will be treated as non-UK resident. You will need to make sure that the tax year of arrival will qualify for split-year treatment


Your 5 year return point is dealt with in my above comment:

I should for clarification have mentioned that I'm assuming you acquired the NZ property after you lost your UK residence (in which case returning within 5 years not a problem).

[baconsarnie]

The problem for me is that logically we shouldn't pay CGT as we will have purchased and sold the property whilst living in NZ. However it seems to complicated with SRT and split year ( which from what I have read discretionary on their part).

Your point about residency is interesting. We purchased the house when we had work to residency visas, we got our permanent residency after 2 years which was about a year later. So whilst we were resident here we didn't hold PR or citizenship.

To be honest I am so worried about getting in a complicated situation with HMRC that I think we should just come back later ie so we are only in the UK for less than 90 days or at the beginning of the 2017/18 tax year because then we will have been away for 5 years and it seems to make all the potential issues go away.

[maths]

In principle, five tax years or more to avoid temporary non-resident CGT provisions from applying.

However it seems to complicated with SRT and split year ( which from what I have read discretionary on their part).

Incorrect.
HMRC has no discretion regarding spilt year treatment. An individual either satisfies the conditions laid down in the legislation or does not.