Should I tell HMRC that I sold my home in Australia?

David Wesley-Yates
26 April 2019

Q

I am worried that I am in trouble with the taxman. When I moved back to the UK after 21 years in Australia, I did not inform HMRC when I transferred money from the sale of my sole residence there to the UK and bought my sole residence here. It was 10 years ago, but do I need to inform HMRC now?

From
JK/Tunbridge Wells

A

HMRC has the power to go back up to 20 years when digging for evidence that someone has failed to notify them of a liability. It could then raise a penalty based on any tax that was due. However, it doesn’t sound like you need to worry.

You would not be charged UK tax if you were not a resident. You are automatically non-resident if you spent fewer than 16 days in the UK in the previous year. This rises to 46 days if you haven’t been classed as a UK resident for the three previous tax years.

Alternatively, if you worked abroad full-time for a tax year and spent fewer than 91 days in the UK, of which no more than 30 were spent working, you would also be classed as a non-resident.

Ten years ago, the test was different. Provided you spent no more than 91 days in the UK on average in a tax year, then you were likely to be classed as non-resident and therefore not liable for tax.

As with all tax rules, there is an exception. Some non-residents have to pay capital gains tax on some foreign gains on their return to the UK after living abroad.

If you were subject to UK tax, and provided your Australian home was your only and main residence, you would qualify for principal private residence relief. This would wipe out the gain and any penalty arising from a failure to disclose it to HMRC. So, either way, you are unlikely to be in trouble with the taxman.