Many people looking to move overseas for tax purposes are concerned with avoiding Capital Gains Tax. In my experience these fall into two broad categories:
Firstly, individuals that own a number of UK investment properties and are looking to sell up. The massive increase in land/property values in the UK results in potentially huge capital gains and this makes the offshore opportunities look very appealing.
Secondly, there are those individuals that own UK shares (often in their own companies) and are looking to sell. This group aren't as large as the above group (as the UK tax reliefs on shares in trading companies are pretty significant anyway) but they form a large minority.
The CGT advantages
The 'holy grail' for these individuals is to avoid paying CGT completely. This is why becoming non UK resident is so appealing - as it can provide for a complete UK CGT exemption. Property owners in particular could be saving anything from 24% - 40% in tax, and on a gain of £1,000,000 this equates to a substantial sum.
How do you achieve it?
In order to qualify for the CGT advantages you need to ensure that you're non UK resident and non UK ordinarily resident for the tax year of disposal.
Note that it's not just a case of abandoning UK residence - you'll also need to lose your UK ordinary residence status. For many emigrants the best way to achieve this is to leave the UK permanently. Permanent in this context though doesn't mean forever, just a period of at least three years.
Providing you can get this confirmed with the Revenue (eg by purchasing a property overseas, selling or long leasing UK property, having close family overseas and limiting UK visits) you should be able to satisfy this. The number of UK visits will be very important and you should keep these to an absolute minimum, particularly in the three years after leaving the UK. In addition ensure you complete the form P85 on your departure and complete any tax return on the basis on non UK residence.
You'll need to watch the timings as most people will need to ensure that they only sell during a tax year of complete non residence and ordinary residence. In other words if you left the UK before 5 April 2008, you would need to ensure that any disposal was after 6 April 2008 to take advantage of the CGT exemption.
When can you return to the UK
If you are selling assets that you owned when you left the UK you'd need to ensure that you were non resident for a period of at least five complete tax years. If you don't the gain will be charged to UK CGT in the tax year that you return here.
It's therefore important for you to keep a track on the years you've been absent as a non resident to avoid the tax charge on your return. As a non resident you also wouldn't usually need to disclose the gain on any UK tax return - unless it becomes chargeable.
What about overseas tax?
You need to avoid the 'jumping out of the frying pan and into the fire' scenario. There are lots of 'low or no CGT' countries and if you're looking to avoid both UK and overseas CGT you'll need to ensure that you obtain residence in such a country. Good examples here are Cyprus, Malta, Andorra, Monaco, Gibraltar, Channel Islands and the Isle of Man. These countries are examined in detail in my other articles to be found here and at http://www.offshoretax.co.uk and http://www.wealthprotectionreport.co.uk
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