Non-resident UK citizen gifting UK property

Looking for some guidance. Client is a UK citizen who has been residing in Italy for many years and has declared Italian tax domicile.

He owns a flat of substantial value which has been in the family for many generations and has been gifted down the line. He now wishes to gift it to his own child.

As the property was gifted to him 40 years ago, there will be a substantial gain. Is the gain calculated for that entire period, or is there a cutoff? Or, if he were first to repatriate to the UK, declare UK domicile for tax purposes, and live in the property again for some time before making the gift, how long would that period need to be to benefit from private residence relief?

I have already advised on GROB rules, survivorship etc.

Thank you for your advice and ideas!

Emma Atkinson
William Sturges

Hi Emma,

If he were to return to the UK to live in the property, PPR is only available for the period of residence or the final 9 months, whichever will be longer. I think this would probably cost more than it saves on the basis of a 40 year ownership period.

Initially, the gain would be calculated based on the current value, less the value at which it was gifted to him. However, there is the option to apply for rebasing as at 5 April 2015.

As a non-resident gifting (disposing) of a residential property, there would be the requirement to report this to HMRC within 30 days of the gift and pay the tax due. There wouldn’t be any requirement to file a Self Assessment Tax Return.

Lucy Orrow CTA TEP
Lambert Chapman LLP

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Where was he born, I take it that as you have said UK citizen, rather than British, it was within the UK?

Peter Harris