Capital Gains Tax payable to UK Revenue & Customs

[RayS]

Hi Guys[:'(]

In today's Sunday Times (Money Section) there is an article on French Property Taxes inc French Capital Gains tax. The article goes on to say/infer that Capital Gains is ALSO payable to the UK tax authorities on the sale of your French property (maison secondaire)

We have had our place in Dept81 for 7 years, so I was aware that we would be due to pay less than the 16% to the French authorities (now 12.8%?). What I was not aware of was that the UK also might want their slice!

Does anybody know if this is true and if so how it would be calculated? Sorry if this has already been discussed on the Forum, I did a quick search but couldn't find anything relevant.

Cheers

Ray

[Chezstevens]

If you were domiciled in the UK then UK C&E will want their cut - just cos it is abroad, if it was in the UK there would be no discussion, and the fact you have paid local CGT doesn't matter.  However probably worth investing a few hundred pounds to talk to a qualified accountant with experience on overseas assets and their disposal.  C&E look at your worldwide assets, or should I say, those that you have declared.  Not an issue for us cos the 2 pennies we have to rub together are getting thinner!!  Kids, dogs, poultry ..... did I mention kids .....

regards

Vern

[Anton Redman]

If you are flying a jet the sound of a flat twin is absolote terror.

[avinalarf]

You are indeed liable to UK CGT on the disposal of a second home in France - but it is due to residency rather than domicile.  If you are reasonable conversant with finance and numbers then you can get the appropriate capital gains helpsheets from the Inland Revenue.  Basically, gains less the appropriate allowances are added to the rest of your income and taxed at the resultant rates.  If the property is jointly owned then the gain is divided and each spouse can claim the full allowances.   However, tax paid in France is deducted from any UK liability, so you won't be taxed twice on the same gain.  

[RayS]

[quote user="Anton Redman"]If you are flying a jet the sound of a flat twin is absolote terror.[/quote]

I'm not flying a jet Anton, I actually ride a 1987 BMW R80G/S - I expect you'll know what that is?

Cheers

Ray

 

[Chezstevens]

[quote user="RayS"]

.

[quote user="Anton Redman"]If you are flying a jet the sound of a flat twin is absolote terror.[/quote]

I'm not flying a jet Anton, I actually ride a 1987 BMW R80G/S - I expect you'll know what that is?

Cheers

Ray

 

[/quote]

I do fly a jet and mine is a R1200RT

[powerdesal]

[quote user="Chezstevens"]

[quote user="RayS"]

.

[quote user="Anton Redman"]If you are flying a jet the sound of a flat twin is absolote terror.[/quote]

I'm not flying a jet Anton, I actually ride a 1987 BMW R80G/S - I expect you'll know what that is?

Cheers

Ray

 

[/quote]

I do fly a jet and mine is a R1200RT

[/quote]

Why do I get a mental image from 'Top Gun'???????[:D]

[Gastines]

I believe the problem with UK tax payable only arises if you take the money/profit back into UK. I believe you can find ways to avoid some of it. Please note I said avoid not evade.

Regards/

[Baz]

[quote user="Gastines"]

I believe the problem with UK tax payable only arises if you take the money/profit back into UK. I believe you can find ways to avoid some of it. Please note I said avoid not evade.

Regards/

[/quote]

I am sorry that this wrong, the gain for UK CGT is payable once the sale is complete, whether or not the proceeds are in the UK. I have been through the procedures and also bear in mind that the exchange rate is calculated on the day of exchange. The Inland Revenue have many ways of tracing non tax payments on overseas transactions.

Baz

 

[Pickles]

[quote user="Baz"][quote user="Gastines"]

I believe the problem with UK tax payable only arises if you take the money/profit back into UK. I believe you can find ways to avoid some of it. Please note I said avoid not evade.

Regards/

[/quote]

I am sorry that this wrong, the gain for UK CGT is payable once the sale is complete, whether or not the proceeds are in the UK. I have been through the procedures and also bear in mind that the exchange rate is calculated on the day of exchange. The Inland Revenue have many ways of tracing non tax payments on overseas transactions.

Baz

 [/quote]

There ARE circumstances under which Gastines' comment would be correct, but they require you to be non-UK DOMICILED, whilst being UK resident. If you are UK-domiciled and UK resident, then you are taxed on the arising basis (ie as per Baz's comment) rather than the remittance basis (Gastines' comment)

Pickles

[Sprogster]

If you are UK domiciled and ordinarily resident, you are are liable to UK income and capital gains tax on your world wide income and gains, no matter where it arises. In addition, your wordwide assets are liable to UK inheritance upon your demise.

The only exception to this are UK residents who have a domicile of origin outside the UK and who have not acquired a UK domicile of choice.

The French Fisc and the UK Revenue and Customs now freely exchange information about each other's residents. Therefore, if you sell your maison secondaire in France information held by the French Fisc on that transaction will be passed on to Revenue and Customs, if you are UK resident.

 

[RayS]

Thanks for all the comments everyone. It looks as though the best thing is to consult an accountant here for definitive advice.

Next question:

do the UK tax people allow for the cost of capital improvements I have made to the house in the same way as the French tax people do when calculating the gain,

and do the UK tax guys allow me to deduct the CGT I will have paid in France from any UK liability,

and do they allow for the "natural" inflation in property values over the last 7 years?

Hope that's all clear!

Thanks to all

Ray

[Pickles]

The responses below are all to be prefaced with "IIRC"

[quote user="RayS"]

Next question:

do the UK tax people allow for the cost of capital improvements I have made to the house in the same way as the French tax people do when calculating the gain,

[/quote]

Yes. You need to have bills.

[quote user="RayS"]

and do the UK tax guys allow me to deduct the CGT I will have paid in France from any UK liability,

[/quote]

Yes.

[quote user="RayS"]

and do they allow for the "natural" inflation in property values over the last 7 years?

[/quote]

Depends what you mean. Yes, the UK has a scale of relief so that the longer you have owned it, the lower the percentage of the capital gain is taxable - but you have to use the NON-business asset relief (unless of course you have been running the house as a business). However, the rates are fixed and not related to the "actual" inflation in property prices.

Regards

Pickles

[Gastines]

As an add on,I always think the old system was fairer. Considering we are supposed to be in a free and open market place. On two properties we sold in France, both secondary homes, we were allowed to use UK bought products. On selling I made up,[sorry,wrong word,perhaps I should have put,Compiled ] a folder with all the receipts from UK suppliers, in my name and UK address, plus the receipts from French suppliers. I did all the work and was allowed 3 times the value of cost of materials against the CGT.  To have this verified I had to get a credited quantity surveyor to inspect/measure/and generally OK the quality of work done. This cost,from memory, £2000. He submitted this report to the Paris tax office and as they agreed all the figures, no tax was payable. The UK tax office still wanted their pound, as is so often the case, but due to some advice given by my accountant I didn't have to pay anything. The monies staying in France. I have often wondered why no-one, especially UK suppliers, have not taken the matter up with the E.U. commission that only work/supplies by French TVA registered tradesmen and suppliers will be allowed against CGT on second/holiday homes. Peter Mandelson not doing his job comes to mind. However ,as I live here and don't take on things that don't affect me or mine any more,I'll let someone else take up the cudgel.

Regards.5 mins St.Malo.and the Hotel des Impots.

[joidevie]

[quote user="Baz"][quote user="Gastines"]

I believe the problem with UK tax payable only arises if you take the money/profit back into UK. I believe you can find ways to avoid some of it. Please note I said avoid not evade.

Regards/

[/quote]

I am sorry that this wrong, the gain for UK CGT is payable once the sale is complete, whether or not the proceeds are in the UK. I have been through the procedures and also bear in mind that the exchange rate is calculated on the day of exchange. The Inland Revenue have many ways of tracing non tax payments on overseas transactions.

Baz

 

[/quote]

When would the CGT need to be declared in the UK? On one's next UK

self assessment form or as a individual declaration? And, if

calculating the figures, which source of exchange rate would you want

to refer to?

Many thanks.

[BJSLIV]

And they will also take 18% of any gains made because the exchange rate has dropped.

[Pickles]

It ought to be pointed out that since the early posts in this thread were written, UK CGT rules have changed, so there is a flat 18% CGT on any gain, with no taper relief, so whereas in France your CGT reduces by 10% per annum after 5 years of ownership, in the UK the CGT stays at 18%, with credit allowed for CGT paid in France.

regards

Pickles

[joidevie]

So, just to clarify, the gain is 'payable' once the sale is complete, or the gain becomes 'declareable' once the sale is complete - ie. It should appear in the immediate tax return, or the following one should the date of completion fall within that tax year's dates?

Many thanks. 

[BJSLIV]

You would declare the gain in the UK on the return for whichever tax year the gain arose. So if you made the gain in August 2009 it would be shown on the forms completed late 2010. You would use the rates of exchange at the time the purchase was made and the relevant rate of exchange at the date of the sale. If you had proof that you had hedged the deal by advance purchase/sale  of the currency you would have evidence to support using those rates instead.

[joidevie]

Many thanks for the clear answer..