Capital Gains

I'm resident in Spain, but have a property in the UK worth around £250K.

If I sell that property, my understanding is that I'll pay CGT in Spain on the "gain" in the value of the asset - in this case, around £60000. I believe that would be at 23%, so around £14000.

According to some information I've seen, "...because of double taxation, you pay where you are resident and then use that as a credit for the other country.".

Sounds clear enough...but what happens in the case where you have no UK tax to pay? What happens to that "credit"?

I believe you pay CGT on UK property and land sales to HMRC even if you live abroad and are non-resident for tax purposes. I guess, due to double-taxation rules, the '£14k' may be 'credited' against that, but you should get proper advice in both countries to be sure.

You will pay CGT in UK as it now classed as a second home. Obviously your home in Spain, as a resident, is classed as your main home.

CGT in UK for second homes or rented homes is 18% for a basic rate taxpayer and 28% for a higher rate payer. The first £12,000 gain is a tax free allowance.

You then pay CGT in Spain but the amount you pay in UK is taken off that. CGT in Spain is 19% on the first €6,000 gain, 21% on 6k to 50k and 23% above that.

Contact a solicitor in Spain (and UK if necessary) who can try and minimise the amount as they should know the exact allowances and calculate it on the current exchange rates depending on your tax levels.

Just to add to the post from Marcliff....
In the UK
* For this tax year (to April 2022) the tax free CGT allowance is £12300 per person so if it's jointly owned you can each claim that amount.
* You can also offset buying & selling costs e.g. Stamp duty, solicitors, estate agents etc.
* You can also offset any capital expense (improvements) you have made during your period of ownership.

So, estimated on single ownership with £60K profit your CGT is likely to be around £9K in total.

a scary prospect based on info Ive been aware of. I understand that it is not just the profit made from original purchase. Instead the total amount that you will be bringing to Spain, will be taxable. So that could lead to many thousands of your money lost to tax, just because the whole amount is classed as new money you are bringing in to the country. I hope it works out ok for you.

Thank you all for the comments so far.

Daz - that IS quite scary if it is the case. Would seem odd calling it a "gains" tax, though.

Definitely something a tax advisor will be involved in, that's for sure!