UK resident – selling a overseas property

A friend asked me how capital gain on a overseas property is calculated. I thought I will give an example enumerated by HMRC in its guidance.

In 1983, Ms A who is both resident and domiciled in the United Kingdom buys a property overseas for foreign currency, which she acquired for £50,000 on the date of purchase of the property (that is, there was no gain or loss on the acquisition and disposal of the currency). In 1986-87 she sells the property for 3,000,000 units of the foreign currency at a time when the exchange rate is 40 to £1. The sterling equivalent of the currency so obtained is therefore £75,000.

The chargeable gain (subject to expenses) is £75,000 less £50,000 equals £25,000

Reference: HMRC Manuals – CG78408

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