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Return to UK but CGT
hi Im returning to uk after seven years. I held on to property in uk during that time and rented it out. I declared the earnings to the ato and uk tax. now I’m returning to uk my accountant says I’m liable for cgt on the amount the property has increased during that time.the property has doubled in price by an extra £275k. please please tell me do I have to pay CGT on the £275k! I’ll have to sell it. Is this true? I recently became Aus citizen. Did it for the kids! |
Re: Return to UK but CGT
Originally Posted by shouldistayorgo
(Post 12524360)
hi Im returning to uk after seven years. I held on to property in uk during that time and rented it out. I declared the earnings to the ato and uk tax. now I’m returning to uk my accountant says I’m liable for cgt on the amount the property has increased during that time.the property has doubled in price by an extra £275k. please please tell me do I have to pay CGT on the £275k! I’ll have to sell it. Is this true? I recently became Aus citizen. Did it for the kids! GST is a goods a consumption tax. Not a tax on speculation. just my take. |
Re: Return to UK but CGT
Accountant says it’s due to this residency rule!! I’m sick with worry. This take bill could force me to sell the house . https://www.ato.gov.au/General/Capit...ralianresident |
Re: Return to UK but CGT
Isn't that ruling about Australian properties - not UK properties?
This seems a very strange situation if it is indeed the case that this ruling applies to UK properties, I would be getting a second opinion from another accountant or from someone like Alan Collett. |
Re: Return to UK but CGT
Which property are you talking about here? One in Australia that you’ve been living in, in which case you just sell it, no CGT, or the U.K. property that you’ve rented out? If you’re going to move back into the U.K. property then you won’t have to pay CGT unless you decide to sell it without it being your place of residence again. |
Re: Return to UK but CGT
The link says (as I read it), either you can treat all your non-Australian property as having been sold when you cease to be Australian resident, paying capital gains tax at that point but having no further liability on those assets when they are sold, or you can "choose to disregard all capital gains" but you will have to pay capital gains tax on that asset in Australia at the time it is sold, even though you are no longer an Australian resident. So if an asset has appreciated £50k between you becoming and ceasing to be Australian-resident, you can pay Australian CGT at that point if you wish. If you don't, and it is eventually sold for £100k more than its value at some later point, you will then have to pay Australian CGT on the whole £100k (presumably subject to whatever exemptions are available, if any). I suspect that this is widely ignored, either wilfully or in ignorance; I have no idea how it is policed.
NB: Beoz - we are talking about capital gains tax, not goods and services tax. |
Re: Return to UK but CGT
I’m getting a second opinion. If true This is just so unfair!! I’ll let you know . |
Re: Return to UK but CGT
Yes, a cessation of residency in Australia can trigger a deemed disposal for CGT purposes - see CGT Event I1:
https://www.ato.gov.au/General/Capit...ralianresident However, be also mindful of the provisions of the Tax Treaty between the UK and Australia, and in particular para 5 of Article 13: Convention between the Government of Australia and the Government of the United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital Gai What you should perhaps be doing is getting an opinion and some pro forma CGT computations under the provisions of the UK and Australia from an accountant who is across the provisions of the UK and Australia, as well as the Treaty provisions. Feel able to ping a PM or an email to me. Best regards. |
Re: Return to UK but CGT
Originally Posted by louie
(Post 12524611)
The link says (as I read it), either you can treat all your non-Australian property as having been sold when you cease to be Australian resident, paying capital gains tax at that point but having no further liability on those assets when they are sold, or you can "choose to disregard all capital gains" but you will have to pay capital gains tax on that asset in Australia at the time it is sold, even though you are no longer an Australian resident. So if an asset has appreciated £50k between you becoming and ceasing to be Australian-resident, you can pay Australian CGT at that point if you wish. If you don't, and it is eventually sold for £100k more than its value at some later point, you will then have to pay Australian CGT on the whole £100k (presumably subject to whatever exemptions are available, if any). I suspect that this is widely ignored, either wilfully or in ignorance; I have no idea how it is policed.
NB: Beoz - we are talking about capital gains tax, not goods and services tax. |
Re: Return to UK but CGT
Originally Posted by mikelincs
(Post 12525319)
That has never come up on this forum AFAIK, and I suspect doesn't really apply, once you are no longer an OZ resident how are the authorities going to know whether you have sold your UK property, or how much the value has increased unless you tell them,
Best regards. |
Re: Return to UK but CGT
Originally Posted by Alan Collett
(Post 12525321)
I take it you are not advocating doing anything unlawful, Mike ...?
Best regards. |
Re: Return to UK but CGT
Originally Posted by Alan Collett
(Post 12525301)
However, be also mindful of the provisions of the Tax Treaty between the UK and Australia, and in particular para 5 of Article 13:
* - i.e. the pay it later on the whole gain on eventual sale, not just the gain in value until ceasing to be resident (but paying it at that earlier point), option So the treaty comes in to save the OP it seems. Alan, why would he need CGT calculations? |
Re: Return to UK but CGT
A capital gain cannot occur till it is crystallised by selling or bed and breakfasting for those into shares. Check with an expert but i think you are liable for uk cgt on the uk property while you were away but you dont pay till you sell, who knows what is noticed / recorded? The only exemption is your main residence while you live there. |
Re: Return to UK but CGT
Originally Posted by uk_grenada
(Post 12525364)
A capital gain cannot occur till it is crystallised by selling or bed and breakfasting for those into shares. Check with an expert but i think you are liable for uk cgt on the uk property while you were away but you dont pay till you sell, who knows what is noticed / recorded? The only exemption is your main residence while you live there. A deemed disposal of an investment asset can take place on certain occasions, including (in Australia) the cessation of tax residency. Best regards. |
Re: Return to UK but CGT
Originally Posted by shouldistayorgo
(Post 12524360)
Im returning to uk after seven years. I held on to property in uk during that time and rented it out. If you rented then you can claim your UK property as your PPOR for 6 years after you move out. But if you bought another property in OZ then yes you are liable for the CGT on the increase on your UK property. But you will be selling your Oz property with no CGT liability which will soften the blow. |
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