Capital Gains Tax advice pls

Goodadvice75

Hi,

I posted a while ago about how to best transfer some Euros from Spain to the UK. This is for a relative who has sold a flat there and has about 35000 Euros to bring over from the sale.

Please can anyone advise on CGT? We know there is a personal allowance of £10,100. The flat was sold a few months ago, so in the 2010-2011 tax year.

Just wondering when CGT is triggered - is it on the date of the sale completion or when you bring the proceeds back into the UK?

Our thoughts are (probably stupidly optimistic!) if he brought back his allowance (£10,100) this tax year and then more in April in the new tax year could he take advantage of two lots of personal allowance, to reduce the CGT liability?

If CGT is triggered on the sale date so he only has one personal allowance to use, pls can anyone help on what costs can be legitimately deducted to help reduce the CGT?

He bought the place quite cheaply more than 15 years ago but had to sell due to financial problems. At the outset there was no mortgage but he later took out a mortgage to help fund costs. Can the costs of this be deducted?

Lastly, does anyone know a bit about Spanish law and whether the equivalent of CGT might have been automatically deducted any way by the solicitors when sold? He had to pay quite a lot of "taxes" in Spain but doesn't really know what they were all for!

Have read there is a double taxation treaty thingammy which means that if you pay the equivalent tax in Spain you don't have to pay it again in the UK. All a bit confusing though really so if anyone is an expert in this area we would be very grateful for any advice.

Huge thanks in advance.

roger_c

If that flat was sold after 6 April 2011, this is in the 2011-12 tax year. I have also assumed that your relative is UK resident for tax purposes?

CGT is triggered on completion of the sale. Assuming the completion date was in 2011-12 tax year any CGT will be payable on 31 January 2013, if it was in 2010-11 the CGT should have been paid on 31 January 2012 (i.e. it is already late). The sale proceeds/cost/gain will have to be included on a 2011/12 tax return, and unless your relative normally completes one, they should fill in HMRC form SA1 now to advise HMRC that they have CGT to pay for the 2011-12 tax year and HMRC will then issue a 2011-12 tax return around 5 April this year.

Your relative can claim the costs of selling and buying the property (legal/marketing/survey fees, etc), but I don't believe they can claim anything in relation to the mortgage. They can also claim for any capital improvements to the property, typically these are large projects and do not include general repair and maintenance costs.

If the Spanish equivalent of CGT has been paid (if there is such a thing as I know nothing about the tax legislation in jurisdictions outside of the UK), then your relative may be able to offest some of this against the UK CGT that is due (as you say this is in relation to the double tax treaty). Can his Spanish solicitor not clarify what Spanish tax has been paid on the property and what type of tax it is?! Again if there is any double tax relief due this would have to be shown on the tax return showing the capital gain.

Perhaps your relative should contact an accountant or tax adviser to act for them in this instance. Hope that my answer is of some help to you.