Capital gains tax

Hi CPR,

Tax allowances in the UK aren't necessarily the same in Spain, so while you believe you have not made a "profit" under UK tax rules, you may well have done so under Spanish tax rules.  In your situation, I think I'd go elsewhere for a second opinion.

Kind regards,

Kim

The rules for Capital Gains Tax applicable to property are fairly simple and clearly explained on the UK government web site.  https://www.gov.uk/capital-gains-tax

If the property was in the UK then CGT is payable there.  If it was sold after 06-Apr. 2020 the tax should have been paid within one month of the sale.  There are a few allowable deductions to calculate the tax payable, but the mortgage isn't one of them.

What year did you complete the uk sale and what year did you become residents?

Hi David 

we have been residents for 4 years and sold in November last year, all our profits went into purchasing a property over here 

HI Gordon 

we have lived in Spain for 6 years and have been residents here for 4 years so that doesnt apply to us. My questions is if we bought a property over here with the money form the uk sale and had to put savings towards it how can i be charged 3500 tax on a profit we did not physically have, They estimated it on the sale pice minus deductions then converted it to euros giving us a 16000 euro profit on what we had declared on our previous modelo 720 but we had a mortgage to pay off which cannot be included so we did not receive that amount. 

Hi CPR2020,

So there is no doubt that you are tax resident in Spain in the period that you sold your UK property.  Unfortunately, unlike the UK, there are no applicable Capital Gains Tax allowances in Spain.  You have to pay Spanish CGT on the difference between what you paid for your property and what you sold it for - the mortgage is not relevant.  There may be some indexation if you purchased your UK property prior to 1994, but I assume your advisor is aware of that, if appropriate.

As our Spanish tax advisors told us at our first residents' annual income tax submission, when they knew we owned a UK property, "Don't sell it!".

https://blog.abacoadvisers.com/calculating-capital-gains-tax-in-spain/

Kind regards,

Kim

My understanding of the UK CGT rules for property since 06-Apr. 20 is that non-residents must pay the tax in the UK and within 30 days of the sale.  

https://www.gov.uk/guidance/capital-gains-tax-for-non-residents-uk-residential-property

What you did with the gain and the mortgage are both irrelevant in calculating the tax liability.  It would appear this liability does apply to you and that you are already well beyond the 30 day payment deadline.  A penalty charge is likely to be added now and interest may be accruing.  

Hello Gordon 

As I have stated we are residents so the link you sent doesnt apply to us. The Modelo 720 isnt due until the end of march so we are within the time limits, our accountant was aware of us selling the property and told us to wait until now to send the details  

You are non-resident in the UK, so my understanding is that UK CGT does apply to you because you sold a property there after 06-Apr 2020.  I would suggest you get a UK based accountant to sort this out for you as soon as possible, to make sure you get the full benefit of any deductions and allowances and to make the payment for you.

From the other comments here, it seems that this will be a simpler and cheaper process for you than it would have been if you were liable for the tax under Spanish rules.