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Can you avoid CGT after you become UK resident? |
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Written by Administrator
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If you sell an asset (eg property) after you become UK resident then you would be liable to UK CGT. The fact that you have been a long term non resident and even if you purchased the asset whilst non resident would not impact on the position. If you sold the asset as a UK resident domiciliary you would be charged to UK capital gains tax (‘CGT’) on the gain realized. The gain would be calculated on the uplift in value from the date of acquisition. Therefore ideally you would sell any asset in a complete tax year of non residence. However if you do have to come to the UK you could think about crystallising the gain whilst offshore - it could then be free of UK CGT as you're a non resident. This would rely on a Revenue Extra Statutory Concession. ESC D2 states that
‘…An individual who comes to live in the United Kingdom and is treated as resident here for any year of assessment from the date of arrival is charged to Capital Gains Tax only in respect of chargeable gains from disposals made after arrival, provided that the individual has not been resident or ordinarily resident in the United Kingdom at any time during the five years of assessment immediately preceding the year of assessment in which he or she arrived in the United Kingdom…’
Therefore if you have come to the UK for the purposes of employment or another settled purpose you are likely to be classed as resident from the date of your arrival. In this case any disposals prior to your date of arrival in the UK would not be charged to CGT. Therefore one option would be to transfer the asset to another entity or a connected person before you come to the UK. This would be a market value transfer and the gain would be crystallized whilst non resident. The disposal of the asset would then realize only a minimal gain as the base cost of the asset would have been uplifted to the current market value.
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