Capital Gains Tax

Overseas Aspects of Capital Gains Tax

Deemed Domicile

There are two situations when an individual can be DEEMED DOMICILE for INCOME TAX and CAPITAL GAINS TAX.

  • LONG TERM RESIDENTS: been a UK RESIDENT for 15 of the previous 20 tax years. (UNLESS: they have NOT been UK RESIDENT in ANY tax year beginning 5 April 2017.)
  • FORMERLY DOMICILED RESIDENTS: Born in the UK AND domicile of origin in the UK AND UK RESIDENT in that tax year.

Temporary Absence Abroad

When an individual is NOT UK RESIDENT, he/she is effectively EXEMPT from UK Capital Gains Tax on their WORLDWIDE capital gains (both UK gains and OVERSEAS gains), apart from some exceptions (trading assets in the UK and UK property).

To counter abuse of this rule, TEMPORARY ABSENCE ABROAD rules apply:

When an individual returns to the UK after a period of TEMPORARY NON-UK RESIDENCE he/she will be charged to tax on gains arising in that period abroad, if the asset was owned before leaving the UK.

An individual will be deemed TEMPORARILY NON-UK RESIDENT if:

  • The individual was UK RESIDENT in 4 of 7 tax years IMMEDIATELY PRECEDING the tax year of departure.
  • The period of NON-UK RESIDENCE is LESS THAN 5 YEARS.