Capital gains (disposal of shares) by European redisent non-domiciled

[michaeltoft@yahoo.co]

I am a European citizen thinking about relocating to the U.K. where I assume I will be able to claim resident non-domiciled status. After my arrival to the U.K., I expect to realise some rather substantial capital gain held in un-listed companies in my home country.

I assume that my resident non-domiciled status means that the capital gains will only be taxed in the U.K. to the extend they are remitted to the U.K. - and this regardless of the fact that the capital gains will (probably) not be taxable in my home country either?

If I choose to remit some of the capital gains to the U.K., could I have a U.K. tax advantage in seeking to 'label' the remittance as a particular sort of income, e.g. by taking salaries and/or consultancies fees out of my company in my home country before selling them off?

[Ian McTernan CTA]

You are correct in your assumption that the gains will not be subject to UK CGT, provided the asset being sold does not come into the UK by means of the situ rules, and provided you do not remit the money.

In order to avoid the UK CGT, the gains and any income arising from them need to be kept separate from each other and also separate from any other money you may have.

If the gains are realised in a non-UK company, then there is no UK CGT to realise on the disposal of the assets- it is when you receive income from the company in whatever form that you will be taxed.

You would be better off it is possible and dependent on which country you currently reside in to release the money into your own hands in the tax year before arrival- any money you have already (ie. capital) before you arrive in the UK can be remitted to the UK without penalty.

This is a complex area and the rules are currently undergoing a review in the UK and professional advice should be sought well before you arrive in the UK.

Ian McTernan CTA
McTernan Associates Ltd
Chartered Tax Advisers
ian@imcternan.com

[Taxbar]

Dear Michael Toft,

The whole area of Non Domiciled taxpayers requires specialist planning and advice before becoming UK Resident.

There maybe tax considerations in your current country of Residence and I usually work together with a tax adviser there to provide integrated advice that avoids Capital Gains Tax in both countries.

It is possible with the correct planning to be able to realise foreign capital gains and to remit all of them to the UK without any tax charge whatsoever!

If you want advice on planning to successfully retain and claim Non Domicile status and to structure your assets to avoid all UK Capital Gains please contact me.

Daniel Feingold Barrister(NP)
Strategic Tax Planning
Editor Of the UK and International Tax Law section of this website.
E-mail sedrate@easynet.co.uk
Tel:+44 161 720 7244