If you are
resident in the UK then overseas property gains are reportable and taxable in
the UK, even though tax may have been paid in the jurisdiction where the
property is situated. Relief is
available from “double” taxation but, nevertheless, the gain must be reported
on a UK tax return and, if the individual does not normally receive a tax
return for completion, it is his/her responsibility to request that a tax
return is issued.
Inherited or
gifted real property also falls within this regime and can trigger a capital
gains tax liability and this is an area that is often overlooked.
There is a
strict time limit which applies to the late disclosure of a chargeable disposal
and the payment of the capital gains tax due.
Disclosure must be made by 9
August 2013 and the capital gains tax must be paid by 6 September 2013. Penalties
will still be levied but voluntary disclosures will attract a lower rate penalty
than if HMRC open an investigation and “find” previously undisclosed property gains.
Many
commentators have questioned HMRC’s timing for the announcement of this
facility. Firstly, the property market
is such that many properties are not even producing gains, and secondly, the
closure date of this particular facility is not that distant and, particularly for
individuals with overseas property gains, it may prove to be quite a challenge
to get all the required information from past years by the 9 August closure
date.
The rules
relating to capital gains tax on property are complex so, if in you are in any
doubt, then please contact us to discuss the situation and, if applicable, we
can prepare the disclosure and a full capital gains tax computation for you and advise you on the inter-action with foreign taxes, if applicable.