Please can you tell me how much Capital Gains Tax will we have…

Thanks.

You will have to pay CGT at 25% in Portugal, being a non-resident of that country. Improvement costs are only deductible in the calculation of the gain for Portuguese CGT purposes if they are incurred within five years of the disposal of the property I'm afraid. Your gain is £77,600 (£117,600 - £40,000), £38,800 each. You will each have a CGT liability in Portugal of £9,700 each. Any CGT you pay in Portugal will be deductible from any CGT you have to pay in the UK.

For UK CGT purposes, the gain is £69,600 (£117,600 - £40,000 - £8,000), £34,800 each. The first £10,600 of your respective gains will be exempt from CGT assuming you don't use it against gains on other assets so you will pay CGT on £24,200 each.

There are two rates of CGT, 18% and 28%. The rate or combination of rates you will pay will be dependent on the level of your income in the tax year of disposal of the property. As you sold the property in 2011/12, the following will apply to each of you:

If your income in 2011/12 including the taxable gain is £42,475 or less then all the taxable gain will be taxed at 18%.

If your income in 2011/12 excluding the taxable gain is more than £42,475 then all the taxable gain will be taxed at 28%.

If your income in 2011/12 excluding the taxable gain is less than £42,475 but more than £42,475 when you include the taxable gain then part of it will be taxed at 18% and part at 28%.

Whichever of the above apply, the UK CGT will be covered by the CGT you will have to pay in Portugal.

Let me know if you have any further queries.