FAQ

Please note that the questions and answers have been prepared from the emails, telephone calls and actual cases that we have dealt and have therefore not provided any names and addresses in order to keep client confidentiality. Please note that the information provided is actual on the day it is published.

 

 

Question

I am not resident in the UK. I have an apartment that I rented out, and now I’m planning to sell it. What taxes do I have to pay in the UK?

Answer

Non-resident individuals must report to HMRC if they sell or dispose of UK property, via the HMRC website – Capital Gains Tax on UK Property Service. This also applies when a non-resident sells shares in a property rich company.

Capital Gains Tax is the tax which is due as a result of the financial gain (often referred to as profit) received once an asset is sold or disposed of.

For non-resident individuals, the CGT charge will be at 18% for basic rate taxpayers and at 24% for higher and additional rate taxpayers. The applicable rate will be determined by reference to your income levels for the relevant tax year. You will be entitled to the CGT annual exemption.

The total gain is calculated by subtracting the sale value from the original purchase value.

For non-UK residents, selling UK property, there is the option to have the chargeable gain on the sale assessed against the 5 April 2015 market value of the property.

Where possible, therefore, it is recommended that you seek a professional opinion on the property value as at 5 April 2015 to establish an accurate understanding of the gain/loss made from this date to date of sale.

You must report and pay any CGT tax due on UK residential property within 60 days of selling the property (if the completion date was on or after 27 October 2021).

Question

I’m a tax resident in the UK for the last 10 years. I have a buy to let flat in London. Can I gift my property to my son? Do we have to pay Stamp duty land tax or capital gains tax on this transfer?

Answer

Whether your son needs to pay Stamp duty land tax depends on whether there is a mortgage on the property. Your son won’t have to pay stamp duty if there is no mortgage. If there is, he will have to pay stamp duty on the value of the outstanding loan.

Capital gains tax (CGT)

Normally, the consideration for the disposal of an asset is what the person who makes the disposal gets for it. And the acquisition cost of the person who acquires the asset is the consideration which that person gave.

But we must use the market value of the asset instead of the actual consideration that passed between the parties if the disposal and acquisition of the asset is between 'Connected Persons'.

A connected person according to HMRC is “A person is connected with an individual if that person is a relative of the individual and a relative is further defined: Relative means a brother, sister, ancestor or lineal descendant.”

Therefore, as your son is a lineal descendant, the CGT payable on the transfer of a property to the child is calculated based on the market value of the property at the date of the gift less the purchase price or the total consideration paid for the property, including capital improvements and legal costs incurred on the property.

You must report and pay any CGT tax due on UK residential property within 60 days of selling the property (if the completion date was on or after 27 October 2021).

Question

My company ceased trading five months ago, can I strike it off?

Answer

When a company has ceased to trade, there are a couple of options that can be taken to close the company down.

The first option is a formal member voluntary liquidation, this will be an expensive option, as you will need to enlist the services of an Insolvency Practitioner to carry this out for you but there maybe tax savings in going down this route.

The second option is to use to strike the company off using form DS01 “Striking off application by a company”. This may be more cost-effective. Form DS01 can only be filed once the company’s accounts and tax affairs are all up to date and there are various other conditions that need to be met, such as repayment of tax and credit obligations, distribution of profits and assets of the company.

Once form DS01 is filed with Companies House, all the assets of the company pass to The Crown. This also includes bank accounts, so it is important to ensure the bank account is emptied and closed before submitting the form to ensure you don’t lose any money unnecessarily.

Question

I am a UK resident for a long time. This year I received dividends from a Russian company. Do I have to pay taxes on these dividends in the UK?

Answer

Foreign dividends are often subject to withholding tax - the overseas company will deduct tax before paying you the dividend. However, the UK has The Double Taxation Agreement (DTA) with Russia. According to DTA, Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

However, such dividends may also be taxed in the Contracting State of which the

company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends and subject to tax in respect of the dividends in that other Contracting State the tax so charged shall not exceed 10 per cent of the gross amount of the dividends.

Thus, if you are a UK resident and receive dividends from a company in Russia, they may be subject to withholding tax in Russia at the rate of 10% under the double taxation treaty.

Also, these dividends will be taxed in the UK, at the rates provided for dividend income, depending on your total income received in the tax period (for the 2024/25 period, dividends up to £500 are taxed at 0% rate, rates of 8.75% applies if total taxable income does not exceed £37,700, 33.75% if total income is between £37,701 and £125,140 and 39.35% if total income is over £125,140).

At the same time, the tax payable in the UK in respect of dividends from Russia may be reduced by the amount of tax liabilities paid in Russia in respect of these dividends (not more than 10%, provided for by the DTA between Russia and the UK).

Question

Most of my life I lived and worked in London, but for family reasons I moved abroad. In the long-term I would consider moving back to the UK. Can I make NI voluntary contributions to cover the periods of absence?

Answer

Voluntary National Insurance contributions can help make sure you have enough qualifying years to get the full State Pension. If you have gaps in your record, you might be able to make voluntary contributions to fill them.

You must be eligible to pay voluntary National Insurance contributions for the time that the contributions cover. You can usually only pay for gaps in your National Insurance record from the past 6 years.

You may be able to pay Class 2 National Insurance contributions for periods where you’ve been abroad, but only if you worked in the UK immediately before leaving, and if you’ve previously lived in the UK for at least 3 years in a row or paid at least 3 years of contributions.

To apply to pay voluntary contributions, you can fill in form CF83. Send it back to HMRC using the address on the form.

Question

Do I need to pay tax on cryptocurrency if I sell my cryptoassets?

Answer

If you're a tax resident in the UK and hold cryptoassets, you will be taxed on any profits made on them. In most cases, HMRC see crypto as a capital asset, therefore when you dispose of a capital asset - you'll pay Capital Gains Tax (CGT). So, you pay tax on the difference between what your cryptocurrency cost you, and how much you sold it for.

You only must pay CGT on your overall gains above your Capital Gains tax-free allowance of £3,000 (for tax year 2024/2025). And your gains from the disposal will need to be reported on a self-assessment tax return.

There will be some circumstances where HMRC may take the view that the individual’s activities in buying and selling cryptoassets constitutes “trading”. This is then viewed as a form of generating income. For UK tax purposes, profits from a trade will be subject to income tax (from 20% up to 45% depending on your income), not CGT. Activities such as cryptocurrency “mining” and “staking” both can potentially be subject to income tax. However, this is very rare.

That is why it is important to seek professional advice and guidance from tax specialists in each individual case.

Question

Please help me figure it out, I work as a seasonal worker in England and my employer has included me in his pension scheme. Can I opt out and get my pension contributions back?

Answer

Your employer must enrol you into their workplace pension if you are an eligible employee -this is called automatic enrolment. Nevertheless, you can opt out of your workplace scheme if you wish.

You can opt out by contacting your pension provider. Your employer must give you the contact details for the pension provider if you ask for them.

If you opt out within a month of your employer adding you to the scheme, you’ll get back any money you’ve already paid in. You may not be able to get your payments refunded if you opt out later - they’ll usually stay in your pension until you retire. You cannot usually start taking money from your pension pot until you’re aged 55 or over.