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Sam, Accountant
Category: UK Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
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Hi Sam,Good afternoonI was born brought up in India

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Hi Sam, Good afternoon I was born brought up in India but I moved to the UK for job mobility in 2006 and became British Citizen in 2013. Back in Dec 2005, I had purchased my first property in India with the intention of having it for residential purposes, during the entire period I have been the owner and have not let it out for rent. The property became vacant since I relocated to UK for job (company job transfer) and used it only when I visited India. Now I want to sell the property and transfer the money proceeds back to UK, am I liable for capital gains tax in UK ?


Since last 6 months I have been staying in India with my family and plan to return to UK in Apr next year. Since my arrival in India in April 13, I helped my father in selling his property and purchasing a new property where I gave up my own savings and also took a home loan, this has made me a third joint holder in the second property.


Can I claim Principal Private Residence (PPR) for my overseas owned property which I plan to sell ? Your help will be much appreciated. Thanks Rahul



Thanks for your question and for asking for me.


I am afraid there will be capital gains tax arising, as there was a period of more than 36 months when this has not been your home.


The fact that you contributed to the purchase of your fathers property has no bearing, nor the fact that there is no capital gains tax in India.


You will fall under UK tax jurisdiction as you have UK citizenship, and there will be a period of less than 5 years (during which the sale takes place) that you have been absent from the UK.


Also the gain will be £100,000 less the purchase price of £20,000 (there is no indexation permitted) so the gain will be £80,000 and not £62,000


But you will be a reduction for the time this was your home, and also have the first £10,600 exempt (as this your annual exemption allowance for capital gains)


Do feel to ask any follow up questions on the information I have provided.







Sam and other UK Tax Specialists are ready to help you
Customer: replied 3 years ago.

Hi Sam


Thanks so much


in regards to your below input, I have not left the UK, I am staying over in india since Apr '13 and working locally. I plan to leave India and relocate to UK.



You will fall under UK tax jurisdiction as you have UK citizenship, and there will be a period of less than 5 years (during which the sale takes place) that you have been absent from the UK.



Why I am not able to claim PPR on the grounds that I was working away from home. Since it is my own home and the intention was not make any profit and also did not give the flat for any renting, why can i not claim? Is it because the property is outside UK?



Thanks for your response


The answer still remains the same in terms of capital gains arising on the sale - and the fact you are merely working/staying in India for 6 months.


You cannot be considered within the job relocation position as this works when leaving the UK to work abroad, with remaining property in the UK, not the other way around (which would fall under India's tax jurisdiction, if capital gains arose)










Customer: replied 3 years ago.

Thanks Sam for the clarification


Since I earn locally (Inida) what tax band will apply for me 18% or 28% for this financial year?


Also can i deduct any maintainance cost that I spent in the last few years and do i need to provide any supporting documents to support the claim?



Thanks for your further questions


Whether you have income from India or in the UK, it will all be liable to UK tax , as you will be treated as resident throughout this and following tax years (based on what you have advised me) so remain liable to tax on worldwide income.


The tax position for capital gain purposes, are as follows -

If your annual income is in excess of £42,475 a year, then the gain will all be liable to 28%.

If you annual income is more than £9440 and less than £42,475, then any unused basic rate band, can be used to allow the equivalent amount of gain at 18% and any further gain at 28%

So for example your annual income is £30,000 then you have £12,475 unused basic rate band (£42474 less £30,000) so the first £12,475 of the gain will be at 18% and the remaining gain at 28% (of course these rates are applied, after costs, capital improvements, reliefs and annual exemption allowance have been applied)


Maintenance, if general repairs are not deductible, they can only be allowed as a deduction against the gain IF capital improvement such as total new kitchen, bathroom and so on and yes you would need to have evidence of these costs, should HMRC ask for them.







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