Island Bound

Hi all

Well I am finally selling our UK house and looks like we are staying here.
I have read lots of questions and answers on this site and checked HMRC website so think I have answers but just want to check with you all.

My situation.

House in the UK was my principal residence before we left.
Left UK on 10 Dec 2011.
Rented house out for whole time before selling.

So our house is sold and if all goes to plan should have it sold and signed etc in November.

I am hoping this puts me within the 3 year (just by about a month?!) allowance of no CGT in the UK?
Am I correct on this part?

I have been declaring rental income to Canadian side and UK side. on tax returns.

I know I will have to pay for the capital gain in Canada on my tax return next year - gain being the difference from when house was bought transferred into CDN to the selling price transferred in CDN, then half that and put it on mine and husbands tax return ,so think I understand that bit.

So questions are:

1: Will I be CGT exempt because I am selling within 3 years of leaving UK?
2: What cost will be involved with transferring our proceeds to our Canadian bank - I am thinking none?
3: If I am liable for UK CGT how will I know - will the solicitor take it off my proceeds or will HMRC contact me?

Hope someone who has done this or a tax expert can help.

JonboyE

Bolded bit: your cost price for Canadian tax is the market value at December 10, 2011 converted at the exchange rate on that day (1.5955).

1. Note that there is a proposed change in legislation. This will reduce the exemption to the final 18 months of ownership from the current three years. If this passes into law this will apply to the 14/15 tax year so it will affect you.
2. The bank will charge a smallish fee and take a cut on the exchange rate (shop around with FX companies) but there are no tax implications if you transfer the money shortly after the sale.
3. If you want to do a belt and braces job file a UK tax return and complete the capital gains section. Claim private residence relief to negate the gain. However, if you are satisfied that private residence relief applies there is no taxable gain so no need to report it. It is impossible to say for sure until the proposed legislation is passed (if it is) and we see exactly what it says.

Island Bound

1. Note that there is a proposed change in legislation. This will reduce the exemption to the final 18 months of ownership from the current three years. If this passes into law this will apply to the 14/15 tax year so it will affect you.

3. If you want to do a belt and braces job file a UK tax return and complete the capital gains section. Claim private residence relief to negate the gain. However, if you are satisfied that private residence relief applies there is no taxable gain so no need to report it. It is impossible to say for sure until the proposed legislation is passed (if it is) and we see exactly what it says

Ok so knew I wouldn't understand some replies....its all too technical for me to translate...

1: I read about the new law taking affect maybe by April 2015. But If I sell and get monies owed to me within 3 years - which it will be then file my Canadian tax return in January 2015. All done an dusted then HOW can I be liable for the new law and get charged accordingly - please explain in basic English.

3: How can I claim private residence relief if it was not my principal residence? Or am I confusing private and principal? I rent here and rented out the UK house.

Sorry for being dumb but your answer is great just made me think of more questions

JonboyE

The current law is that the last 3 years of ownership of your home, regardless of whether or not you lived in the house during these 3 years, will always qualify for private residence relief. As long as you complete the sale by the end of November 2014 you are free and clear. No CGT to pay in the UK.

According to HMRC's website the proposed legislation will be backdated to April 6, 2014. If this is the case (and it is an "if", we will not know what the law will be until it is enacted) then your sale will be in the new regime and only the last 18 months of ownership will automatically qualify for private residence relief. You will need to calculate the total the total amount your house increased in value over the entire period you owned it and apportion some of his rise to the period between the December 2011 and the start of the final 18 months of ownership.

I would not worry to much. The gain over that period will be small and you both have your annual exemptions.


It is called private residence relief in the UK, principal residence exemption in Canada. As said above, as long as your UK property was your private residence before you left the last period of ownership (3 years but maybe 18 months soon) is always treated as though you lived in the house, even if you did not.

Island Bound

Do you know what or where to find out what our annual exemptions are.
And can you confirm the following.
House only increased by £25,000.
So presuming we half that to account for the 18 months not exempt under new law would I be taxed (18 or 28%) on this and do I need to deduct exemption first?

gryphea

Uk capital gains is based on a ratio of years owned. In other words if you are due capital gains on 18 months its not the actual gain in those 18 months but its 18 months divided by months of ownership x capital gain over entire period

Island Bound

More confused than ever.

Owned house total of 4 years.
Left uk 10 dec 2011 and should sell and complete by. Nov 2014.
Total gain from purchase to selling is £25000.
Can someone work out the maths for me please ... Know it's only am idea and not to take it as gospel!!!

😁😫😖

JonboyE

Under current legislation - nil.

Under proposed legislation £25,000 x 18 / 48 = £9,375 potentially taxable. Half each = $4,688. BUT: assuming you are non-resident for tax purposes in the UK (and you most likely are) then, as a non-resident, you do not pay UK tax on UK capital gains. So, no UK CGT.

(Note however, if you return to the UK to live before you have been abroad for five clear tax years this gain could become taxable.)

The government is proposing to change this with regard to residential property so that non-residents will pay CGT. However, this change is set to take effect from April 6, 2015 so it should not affect you.