Hi, I like to ask an UK tax question.I joined an UK bank…

Hi

Thanks for your questions, Lets look at these in turn.

1) do I need to report to the UK Inland Revenue that I own a flat in Hong Kong? Do I need to report my Hong Kong rental income to the UK Inland Revenue in addition to the tax I already paid in Hong Kong?

Yes, you do need to declare the income to HMRC, as you main liability on worldwide income lies in the UK, since you returned to live here. But you can also show the tax suffered in Hong Kong, which will be allowed to reduce any UK tax liability.

2). My wife and I are considering to sell this Hong Kong flat. Are we liable to the CGT in the UK? How are we going to tell UK Revenue that we sell the flat in Hong Kong? Is there something we need to fill in the tax self-assessment form? At the moment, we don't fill this form as we have no other incomes in UK except salary. How is CGT calculated?

Yes, you will be liable to UK capital gains on this sale, and you advise HMRC when the sale has taken place, either by telephoning them, writing to them, or declaring the capital gain on the self assessment tax return (which you should complete due to foreign rental income, even though you do not complete one at the moment)

3) can we bring the money from the sale back to UK?

Yes, as the rental income would then have been subjected to tax, as will the sale of the property, so no further liability arises.

4) if we are liable to any UK tax, what is the best way to minimise it?
Both my wife and I are British citizens and pay UK tax. We own a resident house in the UK.

I assume the property is in joint names.

Rental income, will be split 50:50 as will the expenses, which you can deduct the costs of any interest on a loan, running costs, repairs etc -

Whats left over will be liable to tax. There is no minimising this, as its already taken place, so will be charged upon what has been

Sale of house.

If this is not in joint names, then get it put in joint names, as this will reduce the liability, you advise that this property was bought for investment purposes, so I assuming this has never been your main residence? If it has been, then you will be eligible for private residents relief, and private lettings relief, which will reduce the liability.

Plus for each of you the first £10,600 of any capital gain, is exempt, as this is your annual exemption allowance. So you may find the gain is not that great, but again there is no bettering this position as you now living in the UK, and could not change the fact this has not been your main residence, if in fact it never was. I am afraid you have left seeking advise to mitigate any tax, a little late to be of any real benefit.

Thanks

Sam