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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4199
Experience:  FCCA FCMA CGMA ACIS
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I am a british expat who has been a non resident for tax purposes

Customer Question

I am a british expat who has been a non resident for tax purposes since 1992 when I moved to New Zealand. I own a house in the UK which is now for sale. I understand that I do not have to pay CGT in the UK. The tricky bit is that I am sailing around the world at the moment so am not a tax resident anywhere. Will this matter? Or should I establish tax residency back in New Zealand prior to selling the house as CGT there is 0%?
Also, I file a non-resident tax return in the UK each year as I have pension and rental income. Even though I will not have a CGT liability, will I need to fill in a Capital Gains form in my next return?
Thanks for your help.
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.
As you have been non-resident for over five years the sale of your UK property will escape CGT altogether. However, the law is changing and any sale post April 2015 will be subject to CGT on any gain from the 2015 market valuation. Here is a 'question and answer session in HMRC archives [edited]:
'Q. I became not resident/not ordinarily resident in the UK before 17 March 1998, am I liable to capital gains tax on the disposal of assets?
A. You are not liable to capital gains tax on any disposal of assets you make during the tax years for which you are wholly not resident and not ordinarily resident here, providing they are not assets held for the purpose of a trade, profession or vocation carried on through a branch or agency in the UK. If you return to the UK you will be liable on gains from any disposals during the tax year of return.'
As for declaring any gain HMRC have the following advice:
'If you are not UK resident and sell, give away, transfer or exchange an asset in the UK (such as property, shares or other investments), you need to report a capital gain only if one or more of the following applies:
It is in connection with a trade in the UK
You are ordinarily resident in the UK (only for tax years up to and including 2012 to 13)
If you have previously lived in the UK, and if so, when you left the UK, the period of time you were resident in the UK before your departure and the length of time you live abroad'
You see from the last entry although you have to declare the gain a note in the appropriate section as to your leaving the UK and not returning will suffice to avoid any CGT. The fact that you are travelling is irrelevant, it is your residency in the UK which is the key.
I do hope I have helped you with your question.
Customer: replied 3 years ago.

One more thing. While we ourselves were not living in the house, we rented out part of it to our son. That would not be regarded as a trade or business would it, in terms of the CGT?

Expert:  bigduckontax replied 3 years ago.
No, that would be outside the definition of a trade or business.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 3 years ago.
Thank you for your support.