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Capital Gains Tax Q&A
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Detailed Capital Gains Tax Questions
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Non resident capital gains tax questions
Question: Thank you for your reply for Mrs X above. Before Mrs X leaves the country to be a non resident what formalities must she complete here. Also am I right to assume that: 1) if she leaves before April 6 (or within 90 days from this date?) and has been paying the 30K charge - her overseas income/gain for 2010-2011 will be outside the scope for any UK taxes for this income/gain 2)if she has to visit the UK above her 90 days (to deteremine her UK residence) to attend a wedding or for Medical treament then such days would not be included to calculate number of days spent in the UK. Would the number of days allowed to spend in the UK change if she went overseas for employment? 3) If she were to gift her overseas assets while being a non-resident and then return within 1 or 2 year - are there any factors to effect this gift on her return. Thank you . . .
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UK CGT on unremitted currency gain
Question: Thanks for your answer to my question below. If the non-dom/UK resident just withdrew the funds from his EURO deposit account in Germany to either invest the EURO cash in a EURO denominated investment or just spend it in the EURO zone(without remitting any of those funds) would this also be a disposal for UK CGT purposes? Any exempt amount available? Tax rate the normal 18%? Original Question: A non-dom/UK resident received a gift (EURO in bank deposit account) 1.5 years ago from his mother (Swiss national/Germany resident). This gift was made and retained in Germany in a bank deposit account. In the current low interest environment it has produced only little interest (credited to the same account). The client now wishes to remit this "cash" onshore UK to fund a property purchase. Although the amount in EURO terms is still roughly the same as when the gift was received, in £ Sterling terms this EURO deposit is now worth more than £100k compared to when the gift was made. Upon remittance of this "EURO cash" onshore UK would the "currency gain" be taxable? Kind regards . . .
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Remittance of foreign currency gift
Question: A non-dom/UK resident received a gift (EURO in bank deposit account) 1.5 years ago from his mother (Swiss national/Germany resident). This gift was made and retained in Germany in a bank deposit account. In the current low interest environment it has produced only little interest (credited to the same account). The client now wishes to remit this "cash" onshore UK to fund a property purchase. Although the amount in EURO terms is still roughly the same as when the gift was received, in £ Sterling terms this EURO deposit is now worth more than £100k compared to when the gift was made. Upon remittance of this "EURO cash" onshore UK would the "currency gain" be taxable? Kind regards . . .
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Corporate partner within an LLP
Question: We are members of an LLP. We have purchased goodwill using bank finance. We have reallised that we are paying 40%/50% tax on profits we are retaining to pay the capital back. Can we introduce a corporate partner transfer the goodwill from the LLp to the limited company, leaving a blance due from the limited company to the LLP. The corporate partner would have a share of profits, we wouldn't have to transfer funds as there is a loan account between the two entities so there are no overdrawn laon account issues. Can you see any problems with this? . . .
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CGT and income tax allowances for children
Question: My cousin is starting a new business and needs to buy a property (office & workshop) which is on offer at a very good price for a quick sale. She cannot raise the money and has asked for my help. My wife and I have just wound up our business and will not have much income for 2010-2011. We plan to buy the property and lease it out to my cousin giving her the option to buy after 1 year. If I form and LLP to include my wife and my 2 children (aged 14&7) so as to split the income (approx 20k) and capital gain to save on tax. Will we all get our Personal Tax & Capital gain tax allowance? My children will be partly contributing from their own money (gifts they have been receiving from their relatives) Thank you . . .
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PPR relief election
Question: Hi, I would like help on making an election for PRR & I hope we have not left it too late? We have owned our primary residence (P1) for over 20 years but in Nov 2007 we purchased another house (P2) to renovate and move into as our primary home. We moved into P2 in Oct 2008 as it was not habitable until then. P1 is going to be rented from next month but we have been updating it since then and has been empty during these works. We bought a third house (P3) in July 2009, which we have now moved into whilst full development on P2 takes place, we intend to sell or rent P3 once we move into P2. What is the best way to make an election & have we left it too late for P2? Please let me know if you need any more info. Thank you . . .
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Capital gains tax on transfer of company
Question: My brother is about to gift me all the shares of his limited company. He owns 100% shares of this trading company. He recently sold off all the trading stocks. The company is left only with a property (office & warehouse). The market value, as per 2 estate agents is £450,000 and £ 455,000. The company has a liability of £120,000 being his personal loan to the company. I will be borrowing money to repay this amount back to him. I will be leasing out the property for 1 year. Please can I have your advise on all the taxes that could arise now and also after 1 year if the company sells the property for £550,00 then I wind it down. Thank you . . .
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Discounted value of shares
Question: My client owns 30shares in a property investment co valued at £2m, total shares issued 80. What do you consider is the appropriate discount on the valuation of a 3/8 minority holding. She wishes to dispose of 20 shares to reduce her holding to 10. Other shareholders are two daughters. . . .
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Use of deferred shares to reduce CGT/IHT
Question: property investment co valued at £2m, client(mother)owns 30shares , two daughters own 25shares each. Client wishes to transfer say 20 shares to daughters. It has been suggested that the issue of deferred shares to the daughters with rights only to transfer into ordinary shares at a future date can achieve the transfer of value without IHT/CGT consequences. IS this possible and how in practice does it work. . . .
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Offshore income gains and losses
Question: Thanks for the response but could you also explain how losses are handled on a non-distributing fund ? Finally for a particular ETF security do you calculate whether your have a loss or gain on a trade by trade basis or in aggregate for all trades in the year ? . . .
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Gift by a non-resident
Question: As UK resident and domiciled, if I am gifted a UK residential property by, a non-resident and non-dom person, and then I sell in the future can I count the market value at the date of the gift as the base price for my CGT purposes. . . .
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CGT on properties
Question: I have a small portfolio of rental properties in London. I would like to move from the UK and base myself in another country where I wont be liable for CGT when I eventually sell. Firstly What country would you recomend in Europe? Secondly since I am originally from South Africa I would consider that country too though I would not want to live there all year round. Thirdly can one sell up at the point of leaving and not return for 5 years to get the benefit on no CGT? Thank you very much . . .
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UK tax and offshore discretionary trust
Question: Dear Sirs, what are the tax implication of foreign domiciled individuals of an offshore discretionary Trust if they choose the remittance basis or the arising basis in case a distribution (of income or gains) is made or not? Kind regards . . .
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Extracting cash in company tax efficiently
Question: We have a Ltd Co registered in the UK, formerly a building company and now dormant due to retiral, with assets around £375,000 in cash. Our Accountant says that CGT is due if we wind it up. We enquire if this could be avoided by moving to a tax haven such as Gibraltar or if you have any other suggestions. . . .
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Follow up on offsetting foreign losses for non dom
Question: I apologise for not being clear earlier.I am non dom but uk resident .Say i have 100K in my offshore account and am choosing the remittance basis .Although this account has no income I have started with 100k made capital gains on my US investments and lost 100k also. As i am not allowed to deduct offshore losses. My question is: 1)if i were to remit these funds would I pay 18% on 100K 2)IF i had 10k UK losses would my tax liability be 18k-10k or would it be 100-10=90 x 18% I know it sounds a basic question but i am confused and need your help Many thanks . . .
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Capital Gains Tax
