This thread will try to understand better the rules around property disposal for non UK tax payers.
Background:
Property bought in 2006 for 240K - Now worth 500K. I am non tax resident in the UK and this has always been a BTL rented out
Problem
I have 260K CGT tax which I know I will have to pay at some point when I sell which at the moment would result in 28% of CGT = (260-10 tax free CGT allowance)*28% = 70K
Proposal
Sell property from personal name to SPV which I already have - Property has no mortgage so will only have to pay stamp duty which at the moment is 15K if buying in a company.
Dilema:
Should I pay 15K now to avoid paying 84K in future?
Reasoning
As I understand it if you are non uk tax resident and dispose of property any gains you made prior to april 2015 are tax free and only the increase in value from 2015 -> date of sale is chargeable for CGT purposes. This applies to sale of property that you own personally and also sale of shares in a property rich company
There is a five year temporary non tax resident rule to prevent someone leaving for one year selling their assets and then returning. I ve had a good read on the HMRC websites and in particular this
HS278 Temporary non-residents and Capital Gains Tax (2020) - GOV.UK
My question is whether anyone has done this personally themselves and even thought of whilst non tax resident moving property from personal to company name or other way round to lock in the CGT tax break whilst continuing to own it?
Secondly for this to actually be effective you need to be away for five years - My accountant is checking but does this mean that I can wait five years, sell the asset and then become uk tax resident straight away?? Or does it mean that asset needs to be sold and then a clear five years abroad is required?
Background:
Property bought in 2006 for 240K - Now worth 500K. I am non tax resident in the UK and this has always been a BTL rented out
Problem
I have 260K CGT tax which I know I will have to pay at some point when I sell which at the moment would result in 28% of CGT = (260-10 tax free CGT allowance)*28% = 70K
Proposal
Sell property from personal name to SPV which I already have - Property has no mortgage so will only have to pay stamp duty which at the moment is 15K if buying in a company.
Dilema:
Should I pay 15K now to avoid paying 84K in future?
Reasoning
As I understand it if you are non uk tax resident and dispose of property any gains you made prior to april 2015 are tax free and only the increase in value from 2015 -> date of sale is chargeable for CGT purposes. This applies to sale of property that you own personally and also sale of shares in a property rich company
There is a five year temporary non tax resident rule to prevent someone leaving for one year selling their assets and then returning. I ve had a good read on the HMRC websites and in particular this
HS278 Temporary non-residents and Capital Gains Tax (2020) - GOV.UK
My question is whether anyone has done this personally themselves and even thought of whilst non tax resident moving property from personal to company name or other way round to lock in the CGT tax break whilst continuing to own it?
Secondly for this to actually be effective you need to be away for five years - My accountant is checking but does this mean that I can wait five years, sell the asset and then become uk tax resident straight away?? Or does it mean that asset needs to be sold and then a clear five years abroad is required?
Comment