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Old 08.04.2010, 11:49
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Tax implications on property in UK

If one have a piece of land in the UK (Not main residence) that one bought in the 80's for £3,500 which one totally forgot about and it is now supposedly worth around £30,000.

One is resident in Switzerland.

I believe that there are three Tax issues here:

Wealth Tax
If one forgot to include this item on ones assets for wealth tax in Switzerland.
If one was now to include this item on ones Tax Return, I assume one could be fined even though this would be a genuine error?

Capital Gains
If this piece of land was on your tax Returns previously and one was to sell this piece of land for say £30,000 now; would there be any Capital Gains implications in Switzerland?

Income Tax
I assume that this piece of land if it had Rental value (I would gather very little - say £100 per year) it would have effected the tax payable on the rest of the person's taxable income in Switzerland?
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Old 08.04.2010, 12:19
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Re: Tax implications on property in UK

I'm sure someone will give you more concrete answers, but I have ongoing experience of some of this .

You are taxed on the value of property as it stands, with, as I understood, it re-valuations every 5 years. Now, you are not directly taxed on it, but it adds to your net wealth, so it can bump you up a tax bracket.

CH authorities do not ascribe a rental value to the property (as they do on CH property), but they will tax you on income from the property. Again this is an indirect wealth tax rather than direct income tax and they take it at face value, i.e. if you say it is 100 GBP, they will believe you.

I don't know if there is direct Capital Gains, but again you would be stung for net wealth if you have a lot of cash from the sale. My hunch is that there is a capital gains tax though (as I said, I am going through this at the mo, so will ask my tax person when the chance arises if you are still interested).

Income tax - yes, if I understood your sentence and as mentioned in my comments above. No direct tax, but increase in person's net worth (thus wealth taxed).

I would add, that there is, according to my tax person, an amnesty being offered to folks. It is a single "get out of jail card" where you have to declare all assets up to 10 years back. You would pay back taxes (and doubtless interest ), but no fine.

You can declare what you want in this amnesty, and apparently you will be trusted to have been honest. So I imagine that if you (or one) decided to only declare some assets and they were to catch you (or one) out in the future you (or one) would have the book thrown at you (or one)...
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Old 08.04.2010, 12:57
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Re: Tax implications on property in UK

Thank you for that.

What you say sounds pretty much what I expected.

It looks as if the easiest solution with lesss hassle is perhaps to:

1) Form a UK and UK resident Ltd company with share capital of £100
2) Share Holder can be the Swiss resident.
3) Transfer the property to the UK resident company at say £30,000 (less than £125k so no stamp duty costs; just solicitor costs of £350. No Capital gains because one can justify costs of £27,000 over 20 years to prevent Capital Gains I would expect.
4) Declare on the 2010 Swiss Tax Return £100 of shares as an asset which can be justified by cash drawn from Swiss bank account.
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Old 08.04.2010, 13:04
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Re: Tax implications on property in UK

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1) Form a UK and UK resident Ltd company with share capital of £100
2) Share Holder can be the Swiss resident.
3) Transfer the property to the UK resident company at say £30,000 (less than £125k so no stamp duty costs; just solicitor costs of £350. No Capital gains because one can justify costs of £27,000 over 20 years to prevent Capital Gains I would expect.
4) Declare on the 2010 Swiss Tax Return £100 of shares as an asset which can be justified by cash drawn from Swiss bank account.
I cannot begin to give an opinion on this. As much as I like to think I have an opinion on everything , I have absolutely no experience in this area.

I would suggest re point 3, that if someone in the tax office was being difficult, they might ask for proof of expenditure - certainly when I have done tax returns on UK property, I have on occasion had to provide proof of expenses.
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Old 08.04.2010, 13:18
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Re: Tax implications on property in UK

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I would suggest re point 3, that if someone in the tax office was being difficult, they might ask for proof of expenditure - certainly when I have done tax returns on UK property, I have on occasion had to provide proof of expenses.
Coming up with expenditure of up to 20 years ago is no problem; there are plenty of contacts that have moved abroad or dead people out there
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Old 08.04.2010, 13:24
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Re: Tax implications on property in UK

not sure abotu point 4 there. if you are declaring you own the company 100% i.e. then you must have to declare all the company holds as well - i.e the value of the company?
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Old 08.04.2010, 13:36
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Re: Tax implications on property in UK

Forming a company and involving a solicitor is nonsense!

Swiss wealth tax doesn't start until you have over CH71,000 and then at the rate of CHF0.50 per 1000 per year (canton Zurich).

Thus if you already pay wealth tax and you add this £30,000 or CHF49,500 at (1.66/£) you would pay CHF24.75 a year extra!!

I think you could well argue that the value is less than £30,000 if CHF24.50 is too much for you. But I would be more concerned about the capital gain and the UK tax man. (The is no capital gains tax in Switzerland (as a broad rule.))

Added: in the UK the tax is 18% after an allowance of £10,100 tax free... That's £3,582...
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Old 08.04.2010, 13:52
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Re: Tax implications on property in UK

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not sure abotu point 4 there. if you are declaring you own the company 100% i.e. then you must have to declare all the company holds as well - i.e the value of the company?
Theoretically the person would have as assets the £30,000 loan to the company and the £100 share capital.
It would be possible to create on paper shareholders and a debt outside the EC and the western world though which is quite the norm nowadays similarly.

Last edited by Cashboy; 08.04.2010 at 14:23.
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Old 08.04.2010, 14:02
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Re: Tax implications on property in UK

other possibility is incorporate a BVI and stick it in there....
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Old 08.04.2010, 14:09
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Re: Tax implications on property in UK

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Forming a company and involving a solicitor is nonsense!

Swiss wealth tax doesn't start until you have over CH71,000 and then at the rate of CHF0.50 per 1000 per year (canton Zurich).

Thus if you already pay wealth tax and you add this £30,000 or CHF49,500 at (1.66/£) you would pay CHF24.75 a year extra!!

I think you could well argue that the value is less than £30,000 if CHF24.50 is too much for you. But I would be more concerned about the capital gain and the UK tax man. (The is no capital gains tax in Switzerland (as a broad rule.))

Added: in the UK the tax is 18% after an allowance of £10,100 tax free... That's £3,582...
Thank you for the point there.

Assets declared in Switzerland are in the region of CHF700,000

You might like to note that Ticino seems to have a very high Wealth Tax rates compared to most cantons for some reason? I only noticed this last year.

This property was totally forgotten about so could create problems in the future.

Informing the Swiss authorities at this stage would probably create a fine and interest and could put a black mark on the person?

What is interesting is that if this property was sold, because the owner is non resident in the UK; there would be no Capital Gains in the UK surely?

However, how would the Swiss Tax Authority be able to tell that there was a UK property owned by the Swiss resident or a gain on the sale of the said property unless money is transfered electronically to Switzerland?
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Old 08.04.2010, 14:18
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Re: Tax implications on property in UK

Oops; now I have discovered another asset that has not been declared in Switzerland; again forgotten and actually not sure if an asset or has any value?

A Title - a Lordship - "The Lord of xxxxxxxx"

This cost £6,500 around 1990 and I suppose has to be kept in the owner's name if to be used by them (similary not used however for the last 15 years).

Any idea if there would be any tax implications in Switzerland on this; and would it be treated as tangible property?
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Old 08.04.2010, 14:21
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Re: Tax implications on property in UK

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other possibility is incorporate a BVI and stick it in there....
I would guess BVI s are expensive to set up and expensive to administer (get ripped off by some lawyers and accountants). i would also be concerned of the future with regard to these countries snitching as we have already seen Switzerland and Lichtenstein screwing up and a lot of these countries authorities are becoming shall we say forced to be too friendly to other countries with regard to tax payers.
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Old 08.04.2010, 14:22
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Re: Tax implications on property in UK

I wish i kept discovering assets
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Old 08.04.2010, 14:31
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Re: Tax implications on property in UK

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...3) Transfer the property to the UK resident company at say £30,000 (less than £125k so no stamp duty costs; just solicitor costs of £350. No Capital gains because one can justify costs of £27,000 over 20 years to prevent Capital Gains I would expect.
Frankly doubt you'll get away with that. If you don't have verifiable records, HMRC will quite happily slap you for the full amount. And if they suspect evasion (which is what you would be doing), then they'll throw the book at you.

Apart from that, the expenses you'll be able to offset are limited, if it's just a piece of land.

btw - the use of "one" as the impersonal pronoun is rather old-fashioned. "you" is better.
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Old 08.04.2010, 14:35
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Re: Tax implications on property in UK

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I would guess BVI s are expensive to set up and expensive to administer (get ripped off by some lawyers and accountants). i would also be concerned of the future with regard to these countries snitching as we have already seen Switzerland and Lichtenstein screwing up and a lot of these countries authorities are becoming shall we say forced to be too friendly to other countries with regard to tax payers.
guess again! they are quite cheap..
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Old 08.04.2010, 14:43
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Re: Tax implications on property in UK

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guess again! they are quite cheap..
Out of interest for clients (Russian, UK, Italian etc); what is cheap?

Set up cost?

Annual Legal/Management/Accounatncy fees?
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Old 08.04.2010, 14:48
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Re: Tax implications on property in UK

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Out of interest for clients (Russian, UK, Italian etc); what is cheap?

Set up cost?

Annual Legal/Management/Accounatncy fees?
actual costs can be done for 500us a year including annual fees.. if you pay someone to administer it for you as well - prob 1500- 2000 usd.

No accounts need to be kept..
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Old 08.04.2010, 15:18
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Re: Tax implications on property in UK

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Out of interest for clients (Russian, UK, Italian etc); what is cheap?

Set up cost?

Annual Legal/Management/Accounatncy fees?
I hope you don't actually charge clients for your "services".
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