UK Self assessment

Hi,

We moved here last December and my husband (USC) has done some consulting work in this current tax year for a total of £6500. I know this is below the personal allowance threshold. Other than that he's been staying home and looking after our new baby while I work.

He is about to move back to the USA as he is homesick. Long story and all that.

He has a NI Number and I am just trying to figure what we need to file to clear up his taxes before he goes. Does he need to register as a business? It was a one off bit of IT consultancy and will never happen again, he just gave them an invoice for his hours worked.

Can we register him with the HMRC online self assessment without having an actual business?

I know we'll have to declare on his US taxes in Jan as well.

Bit of a long shot but I know there are some smart folks in here I was hoping to get a quick answer

Victoria

If that was his only income put in a short form return: but if you had any other income - deposit interest from offshore the UK for example - then you'll need a full Return. You can apply for a Govt. Gateway id and password, but it's probably easier for you to ask for a paper form from any HMRC office or any tax agent.

Does about $8 from our US checking account count?

Oh crap.. we sold our house in the US in August. $28k went into our US checking account. It's under the threshold for US capital gains tax but do we have to declare that over here too?

Some brain melting reading last night and I discovered I can't do anything online without an existing UTN which we dont have. I also don't think from what I can see that I can do anything until after April next year anyhow cause all the current forms are for reporting 2011/12 whereas this is earnings for 2012/13. By which point I should be back in the USA as well (pending new visa currently) which is going to make it an equal pain.

I also found the short form info which looks like it will cover what we need as you can add a supplementary capital gains form so thanks for that part.

I found the capital gains tax allowances for individuals but it wasn't clear if as a couple we get that twice (in which case we will owe nothing) or if only one of us declares the gain and thusly only one allowance gets applied. Or do we declare half each?

I'm not an accountant but as I understand it, you do not have to pay capital gains tax in the UK on the sale of your primary residence. I don't know if it makes a difference if the residence was in another country but the reasoning should be the same. You can call HMRC (it's a freephone number) and they answer basic questions like that. If it has a tricky international component, they'll arrange for an 'international specialist' to call you. They're not at all bad to talk to. They usually ask you for your name, which in my paranoia about the IRS I'm loathe to give, so I just say all I have is a general question, or give my first name - not a problem.

Does about $8 from our US checking account count?

Oh crap.. we sold our house in the US in August. $28k went into our US checking account. It's under the threshold for US capital gains tax but do we have to declare that over here too?

If your US house was your primary residence the IRS gives you and your husband a $250k CGT allowance each...ie the first $500k of capital gain is free of tax.

In the UK you get Private Residence Relief on the sale of your main home, so no capital gains tax on that.

Whether you have to pay CGT on the sale of you home in the US will depend on your tax residency when you sold the house and whether it was your primary residence at the time.

In the UK you get Private Residence Relief on the sale of your main home, so no capital gains tax on that.

What this needs is tax planning, not tax compliance. I think the initial difficulty here will be demonstrating that the house sold in August 2012 in the USA was their primary residence since they have been living in the UK since Dec 2011. From a US standpoint, they qualify for relief against US CGT on this sale if they have sufficient years prior ownership. There are two ways round the UK liability (a) no CGT for the non-UK-dom spouse so use this if the house was in the name of the non-dom spouse (b) make a claim to HMRC that the US house was regarded as the primary residence, assuming the US house was not rented out. Advance tax planning would have been better.

What this needs is tax planning, not tax compliance. I think the initial difficulty here will be demonstrating that the house sold in August 2012 in the USA was their primary residence since they have been living in the UK since Dec 2011. From a US standpoint, they qualify for relief against US CGT on this sale if they have sufficient years prior ownership. There are two ways round the UK liability (a) no CGT for the non-UK-dom spouse so use this if the house was in the name of the non-dom spouse (b) make a claim to HMRC that the US house was regarded as the primary residence, assuming the US house was not rented out. Advance tax planning would have been better.

A curious response.

The individual concerned left a house in December 2011 which was the main residence.  It was sold the following August. Under UK law one has 36 months after moving out before UK capital gains tax becomes chargeable.

There is zero UK tax on any gain under UK law.

Under US law one needs to have owned and used for 2 out 5 years before sale to qualify for the $250,000 (or $500,000) exclusion.   This rule was also met.

There is zero US tax on any gain under US law.

There is no need for planning. The practical solution here is that if professional advice is required one should always speak to someone dually qualified US and UK to advise on tax in both jurisdictions so that errors of understanding such as on this occasion as eliminated as far as possible.

Thank you very much for the information regarding primary residence relief, we do indeed qualify for that. Phew.. My apologies for delay in reply, we went away for a long weekend and were prepping for hubby's return to the USA today.

The house was our primary residence for 6 years, was our only purchased property and we left it empty in the hands of our estate agent as it hadn't sold prior to us leaving and we didn't have much choice but to fly over when we did.

Marty, thanks also for the tip about calling HRMC, I know that should be the first step really but paranoia tends to kick in.