CGT implications – Non UK resident

by Readers Question

11:08 AM, 6th May 2015
About 6 years ago

CGT implications – Non UK resident

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CGT implications – Non UK resident

I was searching for an answer to one of my queries and came across this website, found it very useful and helpful. I hope, I can be put in right direction.

I bought a property back in 2009 for approx £100k and now its worth is around £220k. I am trying to work out the CGT amount , please note that I am from Pakistan (common wealth country). Property is BTL and I have been paying income tax.

I am not a British citizen nor do I live/work in UK – last I visited UK was in 2014 for only 15 days and before that in 2009 and 2012 for the same number of days (this, I assume makes me a non resident). CGT implications - Non UK resident

Any guidance or advice will be much appreciated on CGT calculation.

Many thanks

Ali


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Comments

Ali Shah

6:06 AM, 7th May 2015
About 6 years ago

hi and thank you all for your valuable comments and advices...

so in a nutshell ,

1. it means there will be two set of valuation involved. one prior to 6th april and second post 6th april

2. any difference in the valuation figure will be subject to cgt - its kina of confusing or am I just a confused person !! 🙂

the property was put on market in feb 15 and at that time the agents (selling the prop) did a valuation for an amount of 250 but now the price reduced down to 240 - so for instance we sell the prop for 240.. the cgt will be on the difference between the two figures of valuation... correct ?

thanks again all

Mark Alexander

7:34 AM, 7th May 2015
About 6 years ago

Reply to the comment left by "Ali Shah" at "07/05/2015 - 06:06":

Hi Ali

The market proved to you that your property wasn't worth £250,000 in Feb 2015 because your agent no doubt marketed it and it didn't sell. Accordingly you reduced the price and it has still not sold. It will be worth what somebody is prepared to pay for it.

HMRC know from HM Land Registry whether the market in your area is rising or falling on a monthly basis so it is actually quite easy to calculate the figures.
.

Fred Bloggs

8:37 AM, 7th May 2015
About 6 years ago

Reply to the comment left by "Ali Shah" at "07/05/2015 - 06:06":

Ali, forget prior to April 5th, you will need a Valuation fig as at 5th April 2015, then you have your sale figure of whenever you sell the property for,the difference is what you pay CGT on.
E.G.Valuation at 5th April 240,000, you sell the property for 245,000, therefore you pay CGT on 5,000.

Shakeel Ahmad

8:52 AM, 7th May 2015
About 6 years ago

Hi Ali,
If you are confused than do not consider yourself to be inadequate. It is designed to justify the existence of these departments in order to create jobs for the boys. ( All this could be saved if we take the model of Singapore i.e. to CGT no IHT and a flat rate of income tax for all)

The two prices that you are talking about has no relevance for CGT purposes. The price of £ 100k that you paid in 2009 is now history. Hence you have to establish the value of your property on the 5th of April 2015. This will now substitute the £100,000.

Mark, you are right in saying that HMRC uses the land registry. The land registry prices are varied & besides the land registry records have a time lag of around four months.

If I was you. I will ask the Agent that is managing your property to give you a valuation & also take a Zoopla & Land registry valuation and file them. When you get around to selling it take the highest price & the revenue come back to if they disagree you than take a mean average between the agents, Zoopla,& the Land registry.

MARK
I have tried to use the "calculator" & is showing a non realistic price.

Ali Shah

12:48 PM, 7th May 2015
About 6 years ago

thanks again for all the valuable advice - i will update you all once I am done with the selling. thanks again

Lucy McKenna

15:12 PM, 9th May 2015
About 6 years ago

Zoopla figures can be way out and I expect the Revenue will know this. In our case the Zoopla valuation was £180,000 lower than the estate agents valuation. I wrote and asked them to increase it only by £30,000 (as we were selling and this low valuation was not helpful) but they didn't. We sold the flat within 2 weeks for £130,000 more than the Zoopla figure. It is better to pay an estate agent/surveyor for a valuation. They often inflate the value of properties that are to be sold to attract clients to use them, thinking they will achieve this figure. It would be very risky not to check with the revenue what they will accept as they are looking for money at the moment. It surprises me that capital gains tax is only payable from 2015, is this the case if the non resident lives outside the EEC.

Shakeel Ahmad

16:13 PM, 9th May 2015
About 6 years ago

LS:
It should not surprise you. It has been a policy to encourage foreign investment into UK. If it wasn't for the Financial crises the policy would not have changed.

It not a question of EEC. It is a question of the being a non UK fiscal residence.

Neil Robb

21:29 PM, 9th May 2015
About 6 years ago

Hi I would just pay for a valuation survey to be done for the sake of £150.00 that could save you thousands.

Then you have independent proof.

Shakeel Ahmad

21:48 PM, 9th May 2015
About 6 years ago

Agree with Neil Robb. I was going to suggest the same. As Ali is not in UK and knowing the cost of obtaining a visa which he may or may not get plus the air tickets etc. It would have been a expensive venture.

If Ali wishes to take the route suggested by you. I would recommend that he uses a surveyor that is being used by the big lenders..

Lucy McKenna

22:54 PM, 9th May 2015
About 6 years ago

Only paying the CGT on the gain since April 2015 and not from when the property was purchased looks very generous but Ali may still have to pay capital gains tax in his own country. The point about the EEC, If anyone is in this position, people should be aware they will not get away with CGT. I know that if you are French resident for tax purposes you pay CGT on your worldwide assets but because of the double taxation treaty France would deduct any tax that you have already paid in the UK.

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