Gains on assets disposed of after residence is resumed

Gains on assets disposed of after residence is...

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Mr A is NR and NOR for CGT purposes by virtue of being NR and NOR for 5+ years.

UK situs assets have been purchased during this 5 year period. Are they permanently exempt for CGT purposes? If he resumes residence in, say, 2 years time, and then sells those assets, are the gains exempt (despite him being R and OR and they being UK assets)?

I think the answer is that they are permanently exempt, but would appreciate confirmation please.

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By Steve Knowles
12th Apr 2011 12:46

Exempt but

If he sells after his return to the UK, and becomes R/OR, the exemption will be lost - it applies only to non-residents.

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By billgilcom
12th Apr 2011 20:57

For CGT NR Exemption to apply
the client must have
(a) either had the assets when he left the UK indefinitely or permanently or
(b) acquired the assets after he left AND
(c) disposed of the assets while he was out of the UK for a period that included 5 complete tax years from the date of his departure to his date of return.

As soon as he comes back into the UK and becomes UK resident he will then be chargeable as normal on any disposals made in the year of return or later.

Watch out that ESC A11 allows split year treatment for IT purposes only and if a taxpayer is resident at any time in a tax year he will be chargeable to UK CGT on any disposals in that year or later.

So to qualify as exempt client would have to ensure that the assets were disposed of in the tax year prior to his return to the UK.

Effectively unless somebody leaves the UK on the 5th April in any year they will have to for practical purposes have been out of the UK for a full 6 years e.g. leaves 7th April 2008 First full tax year will end on 5th April 2010 and year 5 will end on 5th April 2014 so that client will have to wait until after 6th April 2014 before coming back to the UK.
Hope that thsi helps
[email protected]
www.wamstaxltd.com

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