Capital Gain Tax on foreign properties

[Adrian L]

Dear all,

I have a double citizenahip Italian and British, I am resident in the UK.
Around 35 years ago I inherited a farm in Italy from my father which died at young age, I have been working there with my brother for a few years and made several improvements then I moved to the UK.
My brother and I have now decided to sell the whole property and share the profits, there is not CGT in Italy (at least not in this case) but because I live in the UK I guess that I am liable to pay it.
Because the amount of money involved is quit considerable the most convenient solutions would be for me to move back to Italy and keeping the proceeds from the sale there, however, I was wondering whether there is a tax efficient way to deal with the CGT so that I can bring the profit in the UK and staying here?
Also, how would I calculate the probe value of the property at the time I inherited it? Would I need an estimation from an Italian surveyor and then update it to the current living values?

Thanks in advance

[AGoodman]

If you have been in the UK for 15 years or less then you might be able to elect to be taxed on the remittance basis (so not taxed on foreign gains), but:

- there could be a fee (£30,000 from your 8th year resident here or £60,000 from your 12th year here). If you have been here less time, you just lose your personal allowances for the year
- you would still have to pay tax on proceeds that you brought to the UK at any time

Alternatively/additionally, if you run the farm as a business, you might be able to claim business asset disposal relief to reduce the tax on the first £1m of gain to 10%, which is a pretty good deal, or rollover the gain by reinvesting the proceeds in another business.

The base cost will be the open market value of the farm as of the death of your father, plus any capital (improvement) works you have carried out. The sale price would be the sale price.

[Adrian L]

Thank you so much for shedding some light on this
The farm is run as a business in the name of my brother as at the time of the inheritance I was underage and we didn't change that.
It's now more than 15 years that I am living in the UK, I worked there for around 10 years before moving, the market value is now around 2M to share with my brother, the mortgage for the improvements was 600,000 at the time.
After the death of my father it was a very hard time as I didn't want to give up my education, I spent my youth working and studying at the same because of that huge mortgage for the improvements.
At the time of the inheritance the Euro equivalent from Lira would be around Euro 150,000, therefore, if I am lucky I am supposed to pay a CGT of around 60k for my share if I am lucky?