Non Doms & Overseas Capital Gains in 2011/2012

If your overseas capital gains are quite small it's probably not worth claiming the remittance basis to avoid UK capital gains tax. If your gains for the 2011/12 year are less than the £10,600 annual CGT exemption these could be remitted back to the UK tax free - as long as you don't have any other UK gains that have used up your exemption already. A married couple can enjoy up to £21,200 of tax-free capital gains per year. Provided your other overseas unremitted income and gains are less than £2,000 there will be no further tax to pay. If your overseas capital gains are slightly higher than the annual exemption it may still be better to pay tax under the standard arising basis so as to protect your income tax personal allowance. At what point is it worth claiming the remittance basis? That depends on a number of factors, in particular whether you are subject to the £30,000 charge or not. If you are subject to the £30,000 charge and assuming you earn no other overseas income and are a higher-rate taxpayer, you would need a gain of more than £107,143 to make claiming the remittance basis worthwhile: £107,143 x 28% CGT = £30,000 This ignores the loss of the annual CGT exemption that applies to anyone claiming the remittance basis. When you take this into account, you would need to have an overseas unremitted capital gain of more than £117,743 (£107,143 + £10,600) for the 2011/12 tax year, before claiming the remittance basis would make sense. This also ignores the loss of the £7,475 income tax personal allowance that also applies to anyone claiming the remittance basis (assuming your income does not exceed £100,000, the income level where all UK taxpayers start to see their personal allowances withdrawn). The personal allowance saves a higher-rate taxpayer £2,990 in income tax during the current 2011/12 tax year. To compensate for the loss of this allowance you would need to have an additional £10,679 of overseas capital gains that you can shelter from UK tax by claiming the remittance basis: £10,679 x 28% = £2,990 Therefore, in total, you would need to have at least £128,422 of unremitted capital gains before claiming the remittance basis could be worthwhile: £107,143 + £10,600 + £10,679 = £128,422 It should also be noted that the above calculation assumes that your capital gains are taxed at 28%. Some capital gains (typically from selling a trading business) may qualify for Entrepreneurs Relief and would only be taxed at 10% under the arising basis. In these situations, you may need overseas capital gains in excess of £300,000 (£300,000 x 10% = £30,000) before claiming the remittance basis starts to make sense. It should also be borne in mind that if you pay tax overseas on the gain this would also need to be taken into account.