How To Avoid Capital Gains Tax By Moving Overseas

If you want to avoid UK capital gains tax by moving overseas it's usually necessary to remain non-resident for five complete tax years. Any gains on assets disposed of after you leave the UK will then escape UK capital gains tax completely.

The other side of the coin though is that you'll want to avoid or at least minimise any tax charges overseas. There's no point saving UK tax at say 20% but then incurring tax overseas at 30%!

This is particularly the case when there are reliefs that will apply to reduce any gain for UK tax purposes. The main reliefs that I'm thinking of here could include:

· A disposal of your home. The UK provides for a full tax exemption on the disposal of your main residence (assuming it's been your main residence throughout your period of ownership). Other countries aren't as generous and could only provide for a deferral (eg Spain which provides for a form of rollover relief to defer the gain when you buy another main residence).

· Business assets. Examples here are properties that have been let to a trader. These could qualify for taper relief of 75%. This means that a higher rate taxpayer would have a CGT charge of 10% - which is very low even by international standards

· Gambling winnings - tax free in the UK but not so elsewhere

· Most debts are tax free in the UK - not so elsewhere

· Assets held long term. Any assets held for at least ten years will in any case qualify for maximum non business asset taper relief. This will reduce the effective CGT charge for a higher rate taxpayer to 24% and not 40%

Therefore this makes it very important to ensure that any overseas jurisdiction you choose offer a CGT free or low CGT environment.

Low CGT jurisdictions

Italy 20%

Ireland 20%

Japan 20%

Croatia 25%

China 20%

Spain 18%

However when looking at these you need to bear in mind the opportunities above for low UK CGT rates.

CGT free jurisdictions

If you want to avoid CGT in full there are plenty of these to choose from. Some of the most famous countries with no CGT or can offer a CGT free environment for expats with correct planning include:

Gibraltar

Malta

Andorra

Monaco

Isle of Man

Channel Islands

Cyprus

If you're thinking about moving overseas to avoid CGT you should ensure that you take detailed advice. If you're interested in more articles on moving overseas and avoiding UK CGT visit http://www.wealthprotectionreport.co.uk for further details of offshore tax planning opportunities.