CGT status of UK citizen not in living in the UK

[olly67]

I’m trying to understand where, if anywhere, I will owe CGT on some shares sold in the US.

I am a UK citizen, and was working and paying tax in the US during 2019. I left my job and the US before the end of the year (also their tax year), and have not yet returned to the UK. I do not intend to return to the UK permanently, or work there, until after April 6th 2020. If I sell the shares between Jan 1st and April 5th 2020, under what conditions would I owe CGT in the UK?

Also, under what conditions might I owe CGT anywhere else, including countries I might travel to (outside the US and UK) prior to April 6th.

[AGoodman]

CGT is based on residency so if you were not UK tax resident in 2019/20 you would not ordinarily suffer UK CGT on a disposal.

However, there is an anti-avoidance provision (once s.13, now s.3 TCGA) which would tax you in the event you are temporarily non-resident - I suspect this could well catch you if you have not been out of the UK for 5 full tax years - see HS278

You then have to look at the UK/US treaty - unfortunately it will not protect you if you have been a UK tax resident at any time in the last 6 years (Article 13(6)).

Assuming the UK can tax you under s.3, you will be liable in the tax year you return to the UK but can claim your annual exemption against the gain (reducing the gain by £12,000) and credit any US tax you've paid against the UK liability.

The above assumes there was nothing special about the shares. If they were given to you, or the result of options granted, by your employer, the result may be different.

[olly67]

Many thanks for that. The shares were given to me by my US employer while I was a US taxpayer, and I paid US income tax on them. How does that affect things?

[olly67]

My period of absence from the UK will also have been less than 5 years and I was a UK taxpayer for the 7 years prior to leaving.

[darthblingbling]

The anti avoidance provisions mentioned above will apply. However, if you were given the shares during the period of non residency and you subsequently dispose of the shares while non resident then this will remain outside the scope of the above provision.

However, you will likely remain subject to tax in the US on the disposal by of the shares.

What is the likely gain from any disposal?

[olly67]

Thanks, darthblingbling.

I believe I will be non-resident in the US this tax year (to Dec 2020) as I won't work in or enter the US this year (and I'm not a US citizen), and non-resident in the UK, as I will not have worked in the UK and will have spent fewer than 16 days in the UK. I'm looking at this document: https://www.gov.uk/government/publications/rdr3-statutory-residence-test-srt/guidance-note-for-statutory-residence-test-srt-rdr3
It states:

You’ll not be considered resident in the UK for the whole tax year if you do not meet any of the following:
the automatic overseas tests
the automatic UK tests
the sufficient ties test

I don't think I'll meet any of those tests, so I'll be non-resident in the UK.

My non-residency will be temporary, however, as defined here: https://www.gov.uk/government/publications/temporary-non-residents-and-capital-gains-tax-hs278-self-assessment-helpsheet/hs278-temporary-non-residents-and-capital-gains-tax-2019

I was given the shares in the period of non-residency, and will sell them in the same period of non-residency (i.e. now). Will I owe CGT to the HMRC in this case? It's a little hard for me to really tell from HS278, but it seems like not, as darthblingbling said. Are there any other rules that might apply also (if so, links to the text are greatly appreciated)?

Darthblingbling mentioned I would likely owe CGT in the US in this case. Are there any resources that would indicate this? Reading this seems to suggest I won't owe CGT in the US in this case: https://www.investopedia.com/ask/answers/06/nonusresidenttax.asp

If I sold the shares today the gain would be 62K USD.