ATX Revision Notes

The Scope Of The Taxation Of Capital Gains


 Transfers between husband and wife or civil
partners
- the transfer is @ NO Gain, NO Loss

Example:

Husband transferred an investment property (£50,000 cost) to his wife.

The Market value is £100,000.

So the transfer is for £50,000

If the wife wants to sell it:

Selling price £100,000

Cost (£50,000)

AEA (£12,300)

Taxable gain £37,700

Pay CGT: £37,700 x 10% = £3,770

£300 (£38,000 - £37,700) x 20% = £60

 UK Residency and Domicile - CGT

This is the same as per Income Tax

• If an individual is UK resident and UK domiciled, he is subject to UK CGT on his

worldwide assets.

• If an individual is not UK resident, then he is subject to UK CGT on disposals of all UK

land and buildings (both residential and non-residential properties).

• If an individual is UK resident but not UK domiciled, he is subject to UK CGT on his

worldwide assets BUT there are 2 options: Remittance or Arising basis

Arising basis

• The Overseas gains will be taxed in the UK

• Annual Exemption (AEA £12,300) and DTR will be deducted

Remittance basis

• Only Gains remitted back (sent back) to the UK will be taxed

• NO AEA will be deducted

• Pay the Remittance Basis Charge (RBC)

RBC
£0 if UK resident for <7 of previous 9 tax years

£30,000 if UK resident for >=7 of previous 9 tax years

£60,000 if UK resident for >=12 of previous 14 tax years

If unremitted overseas Gains (Gains that stay abroad) is <=£2,000 - the remittance basis
will apply automatically, there will be no RBC

If unremitted overseas income >£2,000 - there are two options - Remittance or Arising
basis

 Non UK residents selling UK residential

property
Gain arising after 5/4/2015 is taxable

Tax:

Normal (Default) Method:

Proceeds - (MV @ 5/4/2015 or Cost (if purchased after 5/4/15))

Non UK residents selling UK non-residential

property
Normal (Default) Method:

1) Sale proceeds - MV at 5/4/2019

OR

Straight line method:

2) (Sale proceeds - Original cost) x No of months owned after a 5/4/19 / total ownership
period {this method requires an election}

Note:

- Where the UK land/building is used for business purposes, rollover relief may be
available. However, the replacement asset would have to be UK land/buildings (and not,
for example, fixed plant and machinery).

Double Tax Relief

- Calculate both taxes (UK and overseas) and then deduct the lower one

 Individuals coming to and leaving the UK

Pay UK CGT if:

- the individual leaves the UK for a period of less than 5 years and also

- were UK resident for at least 4 out of the previous 7 tax years