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  • FIRST POST
    • notaclue2018
    • By notaclue2018 5th Jan 18, 12:01 PM
    • 19Posts
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    notaclue2018
    UK Ireland capital gains tax confusion
    • #1
    • 5th Jan 18, 12:01 PM
    UK Ireland capital gains tax confusion 5th Jan 18 at 12:01 PM
    Hi everyone

    I'm new here. Would really appreciate some views on the following capital gains tax conundrum.

    Me:
    Bought a flat in the UK in 2008. Sole owner. Single.
    Lived in it for one year at which point I was posted overseas with my job and let it out.
    2012 - got married. My husband owned a house in Ireland where he is resident. We lived it in briefly for a few months in 2011 - 2012 (i.e. prior to getting married) before we were both posted overseas with our jobs. We haven't lived in either property since as we have always been posted overseas. We would now like to sell both properties and buy a family home in Ireland. I will likely sell my flat in the UK first (bought for £250,000, estimated sale value £425,000). My husband bought his house for €250,000 and the estimated sale value is €380,000.

    Questions:
    - We have never declared either of the properties as our main residence as we didn't realise this was necessary. Which one would HMRC class as our main residence do you think?
    - Is it necessary for us to pay capital gains tax on one of the properties ( I am absolutely not trying to avoid paying where it is required - I am a good honest person!)? Out of interest, how would HMRC know about my husband's house in Ireland, for example?
    - Would you recommend I get professional advice on this?

    Thanks in advance.
Page 1
    • Lover of Lycra
    • By Lover of Lycra 5th Jan 18, 1:12 PM
    • 135 Posts
    • 655 Thanks
    Lover of Lycra
    • #2
    • 5th Jan 18, 1:12 PM
    • #2
    • 5th Jan 18, 1:12 PM
    I don't think you can claim a property is your main residence if you are letting it out because it would be the tenant's residence.
    • notaclue2018
    • By notaclue2018 5th Jan 18, 1:30 PM
    • 19 Posts
    • 1 Thanks
    notaclue2018
    • #3
    • 5th Jan 18, 1:30 PM
    • #3
    • 5th Jan 18, 1:30 PM
    Thanks, I see where you are coming from but I believe there are reliefs if you have been working overseas and are unable to return to the property because your job still requires you to be overseas (which mine does).
    • laticsforlife
    • By laticsforlife 5th Jan 18, 1:50 PM
    • 1,174 Posts
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    laticsforlife
    • #4
    • 5th Jan 18, 1:50 PM
    • #4
    • 5th Jan 18, 1:50 PM
    There would be some PRR as you did live in it for at least a year.

    There are several reliefs possible, so the interaction of these needs exploring. PRR, Lettings relief, Final 1.5 years, Employment requirement relief as you mention.

    Edit.

    OK looked it up.

    1. You can get PRR for the time you first lived in it, so a 1? year proportion there.
    2. You can get final 1.5yrs exemption like everyone else (classed as further PRR).
    3. You can get all the years your employer required you to work away under TCGA 1992 S223(3A) & (B) and ESC/D4. this is at CG65067 which is on the internet. This is also classed as PRR, so you'd add all the years/part years and proportion that against the gross gain of £175,000.

    ESC/ D4 is important in your case as it does away with the requirement to come back to the UK and reside again in the property.

    Then I believe you can reduce the gain by £40,000 under S223(4) which is the lettings relief.

    I think the comp is like this;

    x years PRR (sum of above 3 elements) divided by 10 years (ownership) x £175,000, then knock off the £40,000 lettings relief.

    Also you can nominate your PPR if you have more than one, and this can be done retrospectively (as a person isn't expected to know they have to nominate in the first place), so you can simply call your UK property your PPR.

    I reckon you're not going to end up with a bill at all, looks like wholly relieved to me.


    I'd suggest hubby is in same boat but is his dealt with by Irish CG rules or is it N Ireland?
    Last edited by laticsforlife; 05-01-2018 at 2:24 PM. Reason: research
    I didn't do it, nobody saw me do it, you can't prove a thing!
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    • notaclue2018
    • By notaclue2018 5th Jan 18, 1:56 PM
    • 19 Posts
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    notaclue2018
    • #5
    • 5th Jan 18, 1:56 PM
    • #5
    • 5th Jan 18, 1:56 PM
    Thank you. What is the best way to find an accountant/tax adviser who specialises in CGT? I really don't know where to start.
    • notaclue2018
    • By notaclue2018 5th Jan 18, 2:12 PM
    • 19 Posts
    • 1 Thanks
    notaclue2018
    • #6
    • 5th Jan 18, 2:12 PM
    • #6
    • 5th Jan 18, 2:12 PM
    Thank you. What is the best way to find an accountant/tax adviser who specialises in CGT? I really don't know where to start.
    • laticsforlife
    • By laticsforlife 5th Jan 18, 2:29 PM
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    laticsforlife
    • #7
    • 5th Jan 18, 2:29 PM
    • #7
    • 5th Jan 18, 2:29 PM
    Thank you. What is the best way to find an accountant/tax adviser who specialises in CGT? I really don't know where to start.
    Originally posted by notaclue2018
    Well if I'm right, I don't think there's a gain, so I'd maybe set up an appointment on a fixed fee with a decent accountant (find some reviews for a local one), and show them my workings (lets see if anyone else agrees or otherwise with me).

    It shouldn't cost you more than £100 for that advice, then the question is do you have to report it if there is no gain/liability, perhaps not, although are you already on SA for the rental income?
    I didn't do it, nobody saw me do it, you can't prove a thing!
    Quidco, £1,985
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    Tesco Double The Difference, £2,700
    TopCashback,£1,807
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    • notaclue2018
    • By notaclue2018 5th Jan 18, 3:32 PM
    • 19 Posts
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    notaclue2018
    • #8
    • 5th Jan 18, 3:32 PM
    • #8
    • 5th Jan 18, 3:32 PM
    Gosh, you are so helpful, thank you so much!

    Yes, I am already registered for self assessment on account of the rental income.

    My gut instinct was that there was no tax to pay but I was really getting my knickers in a twist about the fact we are married and have two properties, therefore one of them must be liable to some sort of CGT.
    • jimmo
    • By jimmo 5th Jan 18, 11:30 PM
    • 1,895 Posts
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    jimmo
    • #9
    • 5th Jan 18, 11:30 PM
    • #9
    • 5th Jan 18, 11:30 PM
    There seems to be a lot of confusion over "Periods of Absence"
    First of all a qualifying period of absence is deemed to be a period of residence regardless of the actual use of the property. Even if the property is rented out and the tenants residence in reality, for tax purposes it is also the owner's residence (but not necessarily their main residence)
    https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg65030

    That's the easy bit. Looking at whether there is or are any qualifying periods of absence looks a bit more difficult at this stage.
    The first potential stumbling block looks to be your occupation of your (then to be) husband's home in 2011.

    So when you moved into the house in the Republic of Ireland was this period:
    1) part of your original posting overseas in 2009?
    2) a new posting to the Republic of Ireland?
    3) A personal choice not dictated by your employment?

    If your answer is "3" I feel that that would create a gap in your employment overseas such that none of your overseas employment will form a qualifying period of absence so your answers are really important.
    With regard to you looking for professional advice there must be any number of accountants etc. in Ireland both NI and the Republic with experience of both countries' tax systems but the difficulty will be finding one with experience in Capital Gains Tax. I would suggest you let things develop here for a little while and use the knowledge you gain. You can then decide whether to go it alone or judge the professionals' knowledge of a specialist subject.
    • notaclue2018
    • By notaclue2018 6th Jan 18, 2:38 AM
    • 19 Posts
    • 1 Thanks
    notaclue2018
    Hi Jimmo - That's a good point. I suppose it was personal choice on account of my husband's posting. I carried on working for my UK employer from Dublin however. I was there from Feb 2011 to June 2012, which is longer than I had first remembered. We then went overseas because of my husband's job until September 2015 (again, during this period I worked remotely from overseas for my UK employer). Since Sept 2015 I have been posted overseas with my job.
    • laticsforlife
    • By laticsforlife 8th Jan 18, 2:02 PM
    • 1,174 Posts
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    laticsforlife
    jimmo,

    Sorry but I disagree with your point about the whole period becoming null and void because of the 16 months period of personal choice - the legislation doesn't ask why you were abroad, just that you were.

    Firstly I think 223(3)(a) covers the part where she wasn't absent because of employment, and it's less than 3 years.

    Secondly,
    223(3)(b) is a simple question - were you out of the UK working for an employer? If Yes; then you are considered to still have it as your PPR.

    Thirdly,
    223(3)(c) DOES include a reason question, and that is for UK-based absences forced by the employer.


    I still feel it should be OK due to (a) and (b).


    The 'in addition' bit in the above legislation means that each sub-para stands on it's own.

    In other words, you don't have to join these 4 sub-paras to qualify, indeed each sub-para starts with the words "a period of...." clearly showing they are separate periods to be added up.

    I read this to mean that so long as you worked abroad (and RoI is abroad), you can have it, so it doesn't matter about choosing to live with hubby-to-be, in fact it adds him as almost a second sub-reason for being able to claim in 223(3)(b).

    The words in para 223(3)(c) are quite telling as they say "or periods which together... meaning there can be separate periods added together.

    Basically the sum of these parts are all periods where it is your PPR and thus no gain arises.
    I didn't do it, nobody saw me do it, you can't prove a thing!
    Quidco, £1,985
    Shopandscan, £2,510
    Tesco Double The Difference, £2,700
    TopCashback,£1,807
    Thomson EU261/04 Claim, £1,700
    • jimmo
    • By jimmo 12th Jan 18, 9:55 PM
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    jimmo
    laticsforlife,

    You are, of course, correct and my only excuse is that in my working days people were either posted abroad by their employer or went abroad for a new job.
    I totally agree that the OP is totally covered for the whole period and the flat in the UK is a deemed residence.
    You've already dealt with the need for a nomination of main residence in an earlier post.
    For the benefit of the OP.
    https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg65040
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