How to Value Overseas Property for CGT Purposes

Under CGT Act 1992, A person shall be chargeable to capital gains tax in respect of the chargeable gains accruing to him in a year of assessment during any part of which he is resident in the UK or during which he is ordinary resident in the UK. Assuming this person is originally from Hong Kong and left Hong Kong on 01.08.2021 and become a resident in the UK when he arrived in the UK on 02.08.2021. He has a property in Hong Kong which has not been sold when he left on 01.08.2021. the property is then sold on 31.05.2022. For Capital gains tax calculation, can the value of the property at 01.08.2021 be used as the cost of the property, because based on the rules, the ONLY gains accrued from 02.08.2021 to 31.05.2022 should be subjected to UK Capital gains tax. Or we have to use the original cost of the property to work out the total capital gains and apportioned the gains in accordance to the period he is a UK tax resident , i.e. 10 months, for capital gains tax purposes?

Hi Susan Wong,

UK resident customers are chargeable to CGT in respect of any gains arising in the year of assessment in which the disposal is made, this includes foreign disposals. If a chargeable gain accrues to an individual in a year when they are not resident in the UK or the overseas part of a split year then normally they will not be chargeable on that gain in the UK.

If the CG chargeable in the UK is also charged in Hong Kong they should be able to make a claim to foreign tax credit under the DT agreement in place.

If customer is UK Resident, and not claiming remittance basis, they need to declare the full gain arising on the sale of the property in Hong Kong, based on UK CGT computation of liability due. I believe that they are interpreting TCGA92 differently to HMRC. They do not apportion the gain between Non-UK residency and UK. If the disposal arises/occurs in a period in which they are UK resident and there is a gain arising the full gain needs to be declared in UK. Only exception to this is if they are classed as temporary resident, or claiming to be non-domiciled and claiming under the remittance basis. I believe HMRC's choice of wording ""accrues"" is some what misleading.

Tax when you sell property: Selling overseas property 

Thank you.