capital gains tax on flat in Romania

If she's domiciled in the UK she will be taxed on the gain but she won't if she is not UK domiciled.

many thanks, that confirms my understanding, She is domiciled in the UK.

Robert

many thanks, that confirms my understanding, She is domiciled in the UK.

'Domicile' is completely different from 'residence' or 'ordinary residence.' You could live in this country most of your life but still not domiciled here. Those with a father born outside UK normally inherit his non-UK domicile, and it's quite difficult to change it. In your wife's case, I assume her father is Romanian born there, and the fact that she retained her original nationality and now owns a property there makes it a strong case that she is domiciled abroad. Currently the rule is that non-UK domiciles are only taxed on overseas income and capital gains on a remittance basis, so provided she keeps her profit offshore, there is no UK tax liability (though there may be in Romania). The rules are supposed to be changing from next tax year and those who retain non-UK domicile but resident in UK will have to pay an annual charge of 30k if their overseas income or capital gain exceeds 2000 a year (or thereabouts). So to take advantage of current rules, she should realise capital gain before April 6, but consult a financial adviser first.

Alec

It's not that difficult to change. Its sometimes hard to demonstrate that you have changed it, but the situation of someone born in the UK, to a foreign father, who then lives the whould of their formative years in the UK is at the easier end.

tim

Yes, you could, but it would be exceptional. A foreigner coming here and marrying a Brit and settling down and having a family here would certainly be deemed to be domiciled here. The retention of foreign domicile would imply there remained a wish in the person's mind at some point to return to that country forever. If there appears to be a clear intention to remain here forever, usually because one's ties to here are stronger than to where home used to be, then domcile is here.

Yes, initially, at birth.

Not at all.

I disagree. Domicile is easier to change than nationality, in the sense that domicile change just happens by itself, it does not happen as a result of an administrative act, whereas nationality change involves jumping through all sorts of hoops. It even involves, I gather, having to pass a test which most existing UK nationals would fail.

As for "and now owns property there", the fact that she is planning to dispose of it would weaken the case, no?

Well, maybe not. She would sell it in order to buy another one closer to where her parents live (in Romania). We did buy the flat specifically because we thought we might one day go and live in Romania so we wanted to keep a toe hold in the property market there. But it is only a possibility, not a likely one. House prices there are rising at about 40% per year.

However, i don't think we would want to press for non-dom status especially given the upcoming fixed tax for non-doms.

Robert

"RobertL" wrote

Won't non-doms have the *choice* to pay "standard" UK tax, rather than 'remittance basis

• fixed fee', and still keep their non-dom status ?

Thank you all for this very helpful discussion.

So, if people are not fed up with it, here is a further question.

Assume we are both UK domiciled and that wife wishes to sell the flat. The flat is currently in wife's name (though paid for 50:50 in fact). It would seem sensible to transfer half the ownership of the flat to me (the husband) so that when it is sold we can both use our CGT allowances.

Is it sufficient for the UK tax authorities that the wife write a letter gifting half the flat to me (the husband) just before the sale or does the transfer have to registered with the Romanian land registry? Transfers between husband and wife do not trigger CGT as I understand it.

with thanks,

Robert

If you were born here, you have no chance at all of establishing 'non dom' status whilst you are still living here, whatever the status of your wife.

So this would be a non issue (but it wouldn't anyway as you have misunderstood the charge, but I wanted to make the point above.)

tim

Sorry, I meant to say i don't think _she_ would press for ND status. i didn't imagine that i could get it, nor would want it.

Robert

Are you sure? If she is from Romania originally, and still owns an interest in a house there, that would tend to suggest she is not domiciled in the UK.

If the husband dies, would she return to Romania? If the answer is yes, or maybe, then she is still domiciled there.

Agreed. But if they have children here, who have started school, then the answer is likely to be no, especially if they don't speak Romanian at home.

Tim, Is the summary non-dom charge (which I may have misunderstood) as follows please?

If she is dom in UK she pays CGT on the romanian flat sale regardless of whether she remits the money to the UK, If she is not dom here she can choose either : to pay the new charge and pay tax only on income remitted to the UK or: to pay tax here as if she were dom here, therefore paying CGT on the flat sale regarless of wherth the money is remitted back to the UK.

many thanks,

Robert