Crystallising capital gains offshore free of tax

If you're non UK resident it makes sense to make the most of your non UK residence status. One of the main benefits of non UK residence is the capital gains tax exemption providing you're abroad for at least 5 complete tax years. Wherever possible it would be advisable to sell investment assets to take advantage of the capital gains tax exemption before returning to UK residence. The difficulty here of course is in arranging for a disposal, particularly if you need to return to the UK to live fairly quickly. The UK property market crash will also make it more difficult to sell UK property to take advantage of the CGT exemption. There are however other options. UK CGT deems there to have been a disposal in any case where an asset is transferred either to a connected party or there is a bargain not on an arms length basis. In these cases the disposal proceeds is deemed to be the market value of the asset transferred. So, if you can't arrange for a disposal of the assets before you return to the UK, one option would be to transfer to a connected person and crystallise the capital gain offshore. The benefit of this is that you would be treated as selling the asset whilst non UK resident (and therefore free of CGT) and the purchaser would hold at an uplifted base cost which would be equivalent to the market value at the time of the transfer. So any gain to the transfer date would be wiped out and it would only be future gains that would be taxed on the purchaser (unless they were also non resident). So just who can you transfer to? See our article Crystallising capital gains offshore free of tax for more information.