Capital Gains Tax in Spain

meishka

We are selling a property in Spain and will be paying around 4000euros in capital gains tax (In Spain) Do I declare that in the uk? The form is in sterling only here! How does it work declaring it here as we wouldnt be paying any tax here if we did as we would be under the allowance? (In Spain its a flat 19% off the profit) I've searched the net, asked my accountant (no joy as yet) asked the accountant in Spain who doesnt answer and can't get through to HMRC! I am a non tax payer, my husband pays tax , we are not resident in Spain

Keep_pedalling

You should get FTCR on the tax you have paid in Spain so little or no UK tax to pay.

https://www.gov.uk/government/publications/foreign-tax-credit-relief-capital-gains-hs261-self-assessment-helpsheet/hs261-foreign-tax-credit-relief-capital-gains-2018

[Deleted User]

Keep_pedalling said:

You should get FTCR on the tax you have paid in Spain so little or no UK tax to pay.

https://www.gov.uk/government/publications/foreign-tax-credit-relief-capital-gains-hs261-self-assessment-helpsheet/hs261-foreign-tax-credit-relief-capital-gains-2018

Unfortunately the op has stated that there would be no capital gains tax to pay in the U.K. Accordingly there is no relief available. 

Keep_pedalling

[Deleted User] said:

Keep_pedalling said:

You should get FTCR on the tax you have paid in Spain so little or no UK tax to pay.

https://www.gov.uk/government/publications/foreign-tax-credit-relief-capital-gains-hs261-self-assessment-helpsheet/hs261-foreign-tax-credit-relief-capital-gains-2018

Unfortunately the op has stated that there would be no capital gains tax to pay in the U.K. Accordingly there is no relief available. 

Senior moment🤪

[Deleted User]

Keep_pedalling said:

[Deleted User] said:

Keep_pedalling said:

You should get FTCR on the tax you have paid in Spain so little or no UK tax to pay.

https://www.gov.uk/government/publications/foreign-tax-credit-relief-capital-gains-hs261-self-assessment-helpsheet/hs261-foreign-tax-credit-relief-capital-gains-2018

Unfortunately the op has stated that there would be no capital gains tax to pay in the U.K. Accordingly there is no relief available. 

Senior moment🤪

Like I haven’t been there🤔 

meishka

Thanks, so I can't offset the tax I have paid in Spain against Uk tax? (sorry for being thick!) Do i still have declare in the UK?

[Deleted User]

meishka said:

Thanks, so I can't offset the tax I have paid in Spain against Uk tax? (sorry for being thick!) Do i still have declare in the UK?

If you currently complete a self-assessment tax return - Yes! If you don’t -No!

Jeremy535897

The simple answer here has already been given: if there is no UK tax liability on the gain, you cannot claim any relief for the Spanish tax paid. I would ask how you computed the UK gain, because you should do it by converting the purchase price to sterling at the date of acquisition, and deducting that from the sterling equivalent of the sale price using the exchange rate at the date of sale. You don't work out the gain in euros and then convert that number into sterling. When sterling falls against the euro, that can make a major difference (using made up figures for the exchange rate):

Purchase for 30,000 euros when £1 = €1.50, cost £20,000
Sale for 50,000 euros when £1 = €1, sale £50,000, UK gain £30,000
The gain is NOT £20,000 

[Deleted User]

Jeremy535897 said:

The simple answer here has already been given: if there is no UK tax liability on the gain, you cannot claim any relief for the Spanish tax paid. I would ask how you computed the UK gain, because you should do it by converting the purchase price to sterling at the date of acquisition, and deducting that from the sterling equivalent of the sale price using the exchange rate at the date of sale. You don't work out the gain in euros and then convert that number into sterling. When sterling falls against the euro, that can make a major difference (using made up figures for the exchange rate):

Purchase for 30,000 euros when £1 = €1.50, cost £20,000
Sale for 50,000 euros when £1 = €1, sale £50,000, UK gain £30,000
The gain is NOT £20,000 

That’s a good point. However the op stated that that around 4000 Euro would be payable and it is a joint sale. Here in Spain there is no exemption ( unless they are over 65 when it’s all exempt if it has been a main dwelling for three years) and that would equate to a gain of about 18000, 9000 each and so they ‘should’ be OK. 

Jeremy535897

You could well be right, but it is not 100% certain that the property is owned jointly (there is an "I" as well as "we" used). The sale might not happen until after 5 April, when the annual exemption halves to £6,000, and you have to factor in that while the gain measured in euros converted to sterling might be £18,000, the actual gain worked out as I explained could be a lot more.

meishka

Thanks for the replies. Its getting more complicated than I thought! The sol in spain has worked out the gain in Spain is 4000. As you say working it out as above its actually a lot more because of the exchange rate. I guess I can offset sols fees paid at the time for both buying and selling, plus the ITP tac plus the Notary fees? It is jointly owned. It will complete before April this year.