We can provide you with detailed advice on:

• Emigration to avoid income tax
• Becoming non UK resident to avoid capital gains tax
• Using offshore companies and trusts
• Avoiding capital gains tax by becoming non UK resident
• Reducing UK income tax and capital gains tax on overseas properties
• Losing UK domicile when you leave the UK
• Retaining an overseas domicile when you come to the UK
• Buying property in the UK tax efficiently
• How the anti avoidance provisions will apply to offshore tax planning arrangements

What will I receive

You'll receive a detailed e-mailed response to your capital gains tax question within three working days.

Who will provide the response

Your response will be provided by a full time tax specialist who is a Chartered Tax Adviser and Chartered Accountant.

Sample offshore tax question

Question:

I bought a property in Manchester in Sept 1998. This was my main residence until November 2002 when I relocated to Malaysia for employment.

When I left the UK in 2002 I was advised that if I were to sell the Manchester property as my main residence within 3 years, any gain would be free of CGT. Between 3-5 years any gain would attract CGT. After 5 years any gain would be free of CGT.

Questions:

1. Are the 3 year, 3-5 year and 5 year time periods correct and are these still applicable? 2. Is the relevant period from the date I left the UK or are the periods calculated in full tax years? 3. Would I be liable to CGT on any gain if I were to sell my property after 1 December 2007? Would the position be different if I delayed selling the property until after 6 April 2008?

Thank you.

Answer

1. Are the 3 year, 3-5 year and 5 year time periods correct and are these still applicable?

Yes. As the property has been your main residence, principal private residence relief exempts a proportion of the gain on a property , when the property disposed of has been the owners main residence.

This is calculated on the following basis:

Capital gain x period of occupation/period of ownership

In your case the last 36 months of ownership would also be deemed to be occupied by you irrespective of whether you actually occupied the property during this period.

Therefore provided you disposed of the property within 3 years of actually ceasing to occupy it any gain would be fully covered by PPR relief.

If you disposed of the property more than three years after ceasing to occupy it, then you would obtain only partial PPR relief. Eg assuiming ownership of 9 years at disposal and actual occuption of 4 years. A disposal now would mean PPR relief would eliminate 7/9 of any gain (4 years actual occupation + last 3 years deemed occupation). The remaining gain would be charged to CGT, however if the property has been let, you may also be entitled to lettings relief to eliminate the gain, and you would in any case have the annual CGT exemption to offset (currently £9,200). Therefore whether any gain would actually remain on a disposal more than three years after ceasing to occupy the property would depend on the gain arising and the disposal date.

Although you could be within the charge to CGT (as above) as you are a non UK resident and non UK ordinarily resident individual you would be fully exempt from UK CGT provided your absence abroad covered at least five complete tax years.

There are therefore a number of different tax provisions that would apply.

2. Is the relevant period from the date I left the UK or are the periods calculated in full tax years?

The three year period is based on the date you ceased to occupy the property. The five year period of absence for the CGT exemption is based on being overseas for five complete tax years.

3. Would I be liable to CGT on any gain if I were to sell my property after 1 December 2007? Would the position be different if I delayed selling the property until after 6 April 2008?

Provided you did not become UK resident before 6 April 2008, any gains that you realised on the disposal of assets whilst you were non UK resident would not be charged to UK CGT.

Therefore whether you disposed of the property in December 2007 or April 2008 would not matter provided you actually remained non resident until after 6 April 2008.

How much does it cost

If you are not a site member:

The service offers detailed offshore tax guidance for a discounted fee of £99.00, payable online via our secure servers.

If you are a site member:

You have two options: