UK Taxes - General Thread

[b2b]

We can use this thread to discuss / share news, views and Qs & As about UK Taxation.

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Guys, we also need a UK tax forum. As both India and UK are common wealth countries, the tax rules are different in the UK than in the USA for peole like us.

Does anybody know about CGT i.e. if you sold your property in India then where do u pay the tax ? In the UK or in India ?[/quote]


Re-posting 7 from UK Immigration - General Discussions here

[punjabi]

Neesha
As far as I know you will have to pay tax in india only and have to report on your tax return in UK. There is a treaty between uk and india to avoid double taxation .
On a similar note does anybody declare their indian income from rent or bank interests on their UK tax return ?
Also Can we avail of uk pension after we r2i ?

[b2b]

Guys, we also need a UK tax forum. As both India and UK are common wealth countries, the tax rules are different in the UK than in the USA for peole like us.
Does anybody know about CGT i.e. if you sold your property in India then where do u pay the tax ? In the UK or in India ?[/quote]

It depends on your residnetial status in the UK. If you are not resident and not ordinarily resident in the UK then you pay tax in the UK.

If you are not resident in the UK then read http://www.hmrc.gov.uk/cnr/faqs_capgains.htm#cg1 to get further info.

Anyone who is UK resident for taxation purposes and who has a property abroad that is not their primary residence could be liable for capital gains tax when they sell that overseas property. Of course it?s important to mention that many countries around the world levy their own capital gains tax on any property owned in that country - especially when the property in question is not someone?s primary residence. Countries where this is the case and where there is a double taxation agreement in place with the country in which the property owner resides will take their CGT but the vendor will not usually be liable to then pay CGT in their country of residence as well.

In the UK everyone has a capital gains taxation allowance and this can be used by those who sell property abroad and remit the proceeds and profits of the sale to the UK to reduce the overall amount of taxation potentially due.

Anyone who is tax resident in the UK and who wishes to legally avoid UK capital gains taxation on property assets held abroad could consider leaving the UK for a period of 5 years and disposing of their property assets some time after their first full year of non-residence. As long as they remain outside of the UK for at least the 5 year period they will legally avoid having to pay UK CGT on the profits of the sale of overseas property assets.




Having said that coming to specifics of Indian income and UK taxation - there is a double taxation avoidance agreement between India and the UK. According to that the income from property is taxable in the country in which the property is located see DT9605.

But Capital Gains is taxable as per the domestic laws in each country DT9613

That mean the gain on sale of property will be taxed in India for the property situated in India. It will also be taxable in the UK as per UK laws. But one can claim the tax paid in India as deduction (credit) - see DT9623

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UK budget was presented by Gordon Brown yesterday....a quick calculator showing impact on you....

http://news.bbc.co.uk/1/shared/bsp/hi/business/budget_calc/html/budget_calculator.stm

[b2b]

Neesha
As far as I know you will have to pay tax in india only and have to report on your tax return in UK. There is a treaty between uk and india to avoid double taxation .
On a similar note does anybody declare their indian income from rent or bank interests on their UK tax return ?
Also Can we avail of uk pension after we r2i ?[/quote]

As per DTAA DT9605 rent will be taxed in India for property situated in India.

As per DTAA DT9611 interest will be taxed in the UK if you are UK resident. But interest may also be taxed in India but at lower rates prescribed. The tax paid can be claimed as Double Taxation Relief in either country as per respective tax law.

In practice many dont bother to declare those in the UK as the amounts usually fall below the basic exemption / allowance limits and tax deducted in India is sufficient to cover UK taxes in terms of reliefs.

[punjabi]

Does any of you in UK contribute to private pension ?
How and when can you withdraw the money if you r2i.

Also can we avail of state pension after we r2i ?