Foreign investment

Cartoonhead

Hi All,

Not entirely sure if this should be in cutting tax or investment forum.

My wife (Ugandan but UK resident) and I (British citizen) bought a parcel of land in Uganda earlier in the year in preperation to build some apartments which would be rented out on a long term agreement with either the local university or a chinese company building roads in the area.  However government officials have recently been in touch wanting to expand the road our land is currently on meaning it will cut through our parcel.

The land cost us approx. £3000 and although not signed off by the government yet they are offering compensation of approx. £60,000.  There is no tax to be paid in Uganda for this transaction

So my question is, if we were to transfer, for example half of this money (£30,000) to the UK, would this be taxable as capital gains for the £30,000?  If the government doesn't go through with this plan and we decide to build and rent the apartments, would it be taxed the same way?

I hope this makes sense and thanks in adavance.

Jeremy535897

It is possible that you and your wife have different UK tax status. That depends on whether she is UK domiciled for tax purposes. You may wish to explore that issue if it was a realistic option for you to leave the funds abroad, although it is not the panacea it used to be. See https://www.gov.uk/government/publications/residence-domicile-and-remittance-basis-rules-uk-tax-liability/guidance-note-for-residence-domicile-and-the-remittance-basis-rdr1

UK domiciled and resident individuals pay capital gains tax on their worldwide income and gains, whether they bring the funds into the UK or not, unless the double tax agreement says otherwise. Unfortunately, like most such agreements, the UK-Uganda double tax agreement allows the UK to tax all gains arising to UK residents.

Cartoonhead

Jeremy535897 said:

It is possible that you and your wife have different UK tax status. That depends on whether she is UK domiciled for tax purposes. You may wish to explore that issue if it was a realistic option for you to leave the funds abroad, although it is not the panacea it used to be. See https://www.gov.uk/government/publications/residence-domicile-and-remittance-basis-rules-uk-tax-liability/guidance-note-for-residence-domicile-and-the-remittance-basis-rdr1

UK domiciled and resident individuals pay capital gains tax on their worldwide income and gains, whether they bring the funds into the UK or not, unless the double tax agreement says otherwise. Unfortunately, like most such agreements, the UK-Uganda double tax agreement allows the UK to tax all gains arising to UK residents.

Thanks Jeremy.  It's as I thought but thanks for confirming.