Capital Gains Tax (CGT) is a tax on any profit you make from selling things like shares or property. In tax speak – ‘the disposal of an asset’. If you are not living in the UK it doesn’t mean that capital gains tax does not apply to you. To avoid some hefty penalties it’s always best to check your tax position as soon as you can.
Is everything subject to Capital Gains Tax?
No, not every profit you make from the sale of something you own is liable to CGT. Gifts to charity or your spouse are exempt, as are the following: ISAs and NS&I savings, property that is your main home, lottery winnings, sale of your private car, other items that are individually worth under £6,000. This is not a fully inclusive list and you need to work out your own situation before sending your UK tax return.
What is the rate of Capital Gains Tax?
The rate you pay depends on your income tax bracket. Currently, if you are a Basic Rate taxpayer, CGT is at a rate of 18% and 28% for Higher rate taxpayers.
Is there a tax allowance for CGT?
Yes, in the 2015-16 tax year, you don’t have to pay any CGT on a ‘gain’ (profit) up to £11,100. This amount changes each tax year.
Does this all apply if I am a UK non-resident?
This is a complex question – mainly because establishing your residency status is not as straightforward as you would think. You may be living in a different country, but not a non-resident for tax purposes. When you are considering your liability for CGT, this is your first hurdle. HMRC have produced a ‘Statutory Residence Test’ which is designed to help you define your status.
Do I have to pay CGT in my new country of residence?
If the country you now live in has a Double Taxation Treaty with the UK, then you shouldn’t have to pay CGT in both countries. But if no such agreement exists, you may have to pay CGT in the UK and your country of residence. It is wise to seek professional advice in both countries, to make sure you are meeting all legal requirements.
Important changes to CGT rules
Since April 6th 2015, UK non-residents do have to take CGT into account if they are buying am investment property in the UK. Before this date, CGT was not applicable to UK non-residents. As a current owner wanting to sell, you need to work out if the amount of CGT will be balanced by your Personal Allowance amount. To calculate this you need to gather information such as the value of the property and the estimated Capital Gains you expect to get from its sale.
