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Capital Gains Tax


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Hi Paul and Matthew

Sorry for the delay, I have been away on Annual leave.

The answer is that is depends on the situation.

If you own the property before you emigrate then in order for the Capital Gain to be exempt from UK tax on the sale of the asset you must leave the UK for 5 complete tax years; and the asset has to be sold after the end of the tax year in which you leave the UK.

I will clarify this by way of example. You purchase a property in say March 2006 and you emigrate in March 2007. You sell the property in say March 2010. In order for the gain to be exempt from UK tax, you must not be resident in the UK for the tax years starting 6 April 2007 to 5 April 2012, therefore, a return to the UK on 6 April 2012 would mean that the gain is exempt from UK taxation.

If you return within 5 years of leaving then the gain is chargeable in the tax year of return. So in the above example, assume you returned to the UK in March 2011. The Capital Gain would become chargeable in the tax year ending 5 April 2011, and tax would become payable 31 January 2012.

However, if you purchase a property whilst you are already a non-UK resident, and sell it whilst still a non-UK resident (with no periods of UK residence in-between) then the gain does not fall within these rules and would usually be completely exempt.

There are a few other rules to consider, but broadly the two situations are detailed above.

Do also remember, you must always consider the tax rules of the county in which you are resident - it is possible that they will take the Capital Gain in to account within their own tax system.

Therefore I would recommend that if you do decide to sell an asset whilst you are non-UK resident that you do seek tax advice.

I hope this clarifies the situation. Should you require any specific advice, please do email me on sherena.glanton@horwath.co.uk to discuss this further.

Kind regards

Sherena Glanton CTA


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