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Frequently Asked Questions (FAQs) - Capital Gains

 

Contents

FAQs - CAPITAL GAINS

Q1. I am not resident in the UK, am I liable to capital gains tax?

A.
(i) If you are not resident in the UK but are ordinarily resident here, you are liable to capital gains tax for each year that you are ordinarily resident here.

(ii) If you are not resident/not ordinarily resident in the UK then you may or may not be liable to capital gains tax, depending on the date that you left the UK, the period of time you were resident in the UK before your departure and the length of time you expect to live abroad. See answers to Q3 and Q5 below.

Q2. I carry on a trade through a branch or agency in the UK, but I am not resident/not ordinarily resident, am I liable to capital gains tax when I dispose of assets held for the purpose of this trade?

A. Yes, you are liable to capital gains tax on these disposals.

Q3. I became not resident/not ordinarily resident in the UK before 17 March 1998, am I liable to capital gains tax on the disposal of assets?

A. You are not liable to capital gains tax on any disposal of assets you make during the tax years for which you are wholly not resident and not ordinarily resident here, providing they are not assets held for the purpose of a trade, profession or vocation carried on through a branch or agency in the UK. If you return to the UK you will be liable on gains from any disposals during the tax year of return. However, see the answer to Q10 concerning possible concessional treatment.

Q4. I am going to live abroad for less than 5 years, am I liable to capital gains tax if I dispose of my shares whilst I am not resident and not ordinarily resident in the UK?

A. It depends. You will be liable to capital gains tax on the disposal of any shares you acquire before you leave the UK if you are resident or ordinarily resident here for at least part of each of 4 out of the 7 tax years immediately prior to the year of your departure . If you are liable, any gain or loss on your disposals are treated as accruing in the tax year of your return to the UK.

Q5. I understand that non-residents are now treated differently for capital gains, when did this happen and what are the changes?

A. The changes are effective from 17 March 1998. Before that date, if you were not resident and not ordinarily resident in the UK you were not liable to capital gains tax on disposals of assets that were not held for the purpose of carrying on a trade, profession or vocation through a UK branch or agency. If you left the UK on or after 17 March 1998 you fall within the new rules for capital gains.

Q6. How long do I need to be abroad to avoid being liable to capital gains tax?

A. This depends on when you left the UK:

(i) If you left the UK on or before 16 March 1998 see the answer to Q3.

(ii) If you left the UK on or after 17 March 1998 you would need to be not resident and not ordinarily resident in the UK for at least 5 full tax years between the year you left the UK and the year of your return.

Q7. I am leaving the UK, will I be liable to capital gains tax if I sell my home before or after I leave the UK?

A. In most cases you will not pay tax on any gain you make when you dispose of your only residence. You may be liable to capital gains tax if you leave your home or have a second property. You will find more information on this topic in our help sheet IR283 - "Private Residence Relief" and can also be obtained from our telephone orderline on 0845 9000 404, or if outside the UK 44 870 1555 664.

Q8. I live abroad and let my property in the UK. I am thinking of selling this property, will I be liable to capital gains if I sell this before I come back to the UK?

A. See the answers to Q3 and Q5 to establish if you are liable to capital gains tax. If you are liable to capital gains tax then this will include the gains you make on disposal of your let property. If your let property was at some time your home, please refer to help sheet IR283 - "Private Residence Relief" and can also be obtained from our telephone orderline on 0845 9000 404, or if outside the UK 44 870 1555 664.

Q9. I am leaving the UK shortly, am I liable to capital gains tax in the year I leave the UK?

A. Yes, but if you cease to be resident or ordinarily resident in the UK, you may, by concession (extra statutory concession D2), not be liable to capital gains tax on gains arising to you from disposals made after the date of your departure. However, you can only qualify for this concession if you were neither resident nor ordinarily resident in the UK for the whole of at least 4 of the 7 tax years immediately preceding the tax year in which you leave the UK

Q10. I am thinking about coming to live in the UK, am I liable to capital gains tax in the year of my arrival in the UK for permanent residence?

A. Yes, but if you become resident in the UK during a tax year, having been neither resident or ordinarily resident in the UK at any time during the 5 tax years immediately preceding that year, you are, by concession (extra statutory concession D2), liable to capital gains tax only on gains arising from disposals made after the date of your arrival.

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