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Where Taxpayers and Advisers Meet

Do I need to pay tax on disposal of foreign carpark space?

LittleB
Posts: 9
Joined: Sun Apr 07, 2019 2:11 am

Do I need to pay tax on disposal of foreign carpark space?

Postby LittleB » Mon Apr 08, 2019 2:26 pm

Dear all,

My family just moved to the UK from HK in Apr-2018 and we are now non-domiciled UK resident from tax year 2018/2019.

When we were in HK, we bought an apartment with two carpark spaces in 2012. That apartments was used as our main home from Sep-2012 to July-2017 and the two carpark spaces were all used by my family.
After we moved out from that apartment in July-2017, one of the carpark spaces had been rented out for 1 year from July-2017 to Aug-2018 and finally sold in Aug-2018.

My questions are:

1, Do I need to pay tax on selling of this carpark space?
2. Do I need to report this disposal of carpark space in my self-assessment?
3. If I need to file this in my self assessment, what the cost of that carpark space should be used for calculating the return? Should I obtain the market value as of Apr-2018 as the cost, since I moved to UK in Apr-2018 only.
4. For the fund receiving from the sales of carpark space, do I need to pay tax if I bring them into UK?

Thanks in advance for your advice.

maths
Posts: 7537
Joined: Wed Aug 06, 2008 3:25 pm

Re: Do I need to pay tax on disposal of foreign carpark space?

Postby maths » Tue Apr 09, 2019 2:22 pm

Was the rented car park space sold at the same time as sale of the apartment and the other car park space

OR

was the apartment and one car park space sold and then at a later date the other rented car park space was sold separately?

LittleB
Posts: 9
Joined: Sun Apr 07, 2019 2:11 am

Re: Do I need to pay tax on disposal of foreign carpark space?

Postby LittleB » Thu Apr 11, 2019 4:24 pm

Hi Maths

To be clear, my family moved to UK and start to have our main and only home in UK starting from Mid-July 2018. I will probably apply for split year treatment for the tax year 2018/2019.

We moved out from my own HK apartment from July-2017 and then stayed in my mum's home from July-2017 to July-2018.

As of now, I still keep and own that apartment and one of the carpark space (A) for rental income.

For carpark space (B), I rented it out from Aug-2017. Then it was sold with exchanging of contracts in May-2018 (which is earlier than when I resided in UK) and the completion date of this sales was in Sep-2018 (which is after I resided in UK).

I am not sure if I need to report this sales and pay the tax on the sales of carpark space (B).

Thanks in advance for your advice.

maths
Posts: 7537
Joined: Wed Aug 06, 2008 3:25 pm

Re: Do I need to pay tax on disposal of foreign carpark space?

Postby maths » Thu Apr 11, 2019 9:38 pm

On the basis the tax year 18/19 qualifies as a split year (possibly under Case 4) and as you exchanged contracts prior to the overseas part of 18/19 terminating no UK capital gains tax (CGT) should arise on the gain on a sale of car park B.

So long as any sale proceeds are not remitted to the UK no UK CGT charge would arise on any agin as you are non-domiciled.

In any event the apartment whilst your were living in it was (I assume) your only or main home/residence until you let it out upon leaving HK in July 2017. As a consequence, the gain on any sale of car park B which was in essence part of the apartment to be enjoyed with it would be exempt for the most part with the balancing part of the gain subject to CGT but reduced to nil because of lettings relief.

LittleB
Posts: 9
Joined: Sun Apr 07, 2019 2:11 am

Re: Do I need to pay tax on disposal of foreign carpark space?

Postby LittleB » Thu Apr 11, 2019 10:06 pm

Hi Maths

Thanks for your explanation.

Yes, I believe my situation belongs to Case 4.
Before I moved out of my apartment in Jul-2017, it is my main and only home/residence in HK.

I have remitted part of sale proceeds into my UK bank account and not sure if I need to file/report anything to HMRC.

Thanks in advance for your advice.

maths
Posts: 7537
Joined: Wed Aug 06, 2008 3:25 pm

Re: Do I need to pay tax on disposal of foreign carpark space?

Postby maths » Fri Apr 12, 2019 12:32 am

What was the gross sale proceeds?

Are you intending to claim remittance basis Treatment ?

LittleB
Posts: 9
Joined: Sun Apr 07, 2019 2:11 am

Re: Do I need to pay tax on disposal of foreign carpark space?

Postby LittleB » Fri Apr 12, 2019 7:09 am

Hi Maths

The sales proceeds for carpark space (B) were around GBP200K eqv. and I have transferred GBP150K from my HK bank account to the UK since Jul-2018.

I am still thinking if I should claim remittance or arising basis treatment.
If this sale is not subjected to GCT, will there be any difference for using remittance or arising basis treatment?

Scenario 1
If I use remittance basis treatment, I am planning to use a separate bank account in HK to keep all my HK incomes since mid-Jul of 2018 (the date I moved to the UK).
If I do so, does it mean I can freely to transfer the funds in all my other bank accounts which were earned before I reside in the UK?
Also, should I assume that the sale of carpark space (B) happened before Jul-2018? So I don't need to put the sale proceeds into the separate bank account.

Scenario 2
If I use arising basis treatment, I will file all my HK incomes in self-assessment since I reside in the UK.
For the sale of the carpark space (B), should I file anything in self-assessment?
Also, I think I can feely to transfer funds from my HK bank account to the UK as I use arising basis treatment, is my understanding correct?

Thanks again for your advice.


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