Uk capital gains tax : 5 calendar years or 5 complete tax years

PoppyGirl · #1 28.02.2021, 17:47

Hi

I am new here and have found a lot of useful information on capital gains

One thing that jumps out is capital gains for assets owned before you moved to Switzerland. The Following page sets out what temporary tax residence means but it remains unclear if that is five full tax years or five calendar years

I moved to Switzerland in June 2019 and my question is if I do sell an asset which I owned before and do not wish to pay Uk cgt (and Switzerland seems to have no cgt on property) what is the earliest date I can move back to the Uk?

Is it June 2024 which is five calendar years and would fit the b permit I have or is it five tax years which means 6 April 2020 would be the first year and the earliest departure 6 April 2025. That nine month difference is massive for me and would mean whether I decide to sell the asset or not

The best hmrc page I could find here but I could not make out whether five calendar or tax years. I have figured out everything else including paying cgt in Uk on gains made after 2015 regardless. This question is about temporary non resident and the five calendar or full tax years

https://www.gov.uk/hmrc-internal-man...manual/cg26540

fatmanfilms · #2 28.02.2021, 20:26

	Quote:	PoppyGirl
	Hi I am new here and have found a lot of useful information on capital gains One thing that jumps out is capital gains for assets owned before you moved to Switzerland. The Following page sets out what temporary tax residence means but it remains unclear if that is five full tax years or five calendar years I moved to Switzerland in June 2019 and my question is if I do sell an asset which I owned before and do not wish to pay Uk cgt (and Switzerland seems to have no cgt on property) what is the earliest date I can move back to the Uk? Is it June 2024 which is five calendar years and would fit the b permit I have or is it five tax years which means 6 April 2020 would be the first year and the earliest departure 6 April 2025. That nine month difference is massive for me and would mean whether I decide to sell the asset or not The best hmrc page I could find here but I could not make out whether five calendar or tax years. I have figured out everything else including paying cgt in Uk on gains made after 2015 regardless. This question is about temporary non resident and the five calendar or full tax years https://www.gov.uk/hmrc-internal-man...manual/cg26540

It's tax years, we had a discussion last year, it could be 7 years was the outcome.
You need to take specialist legal advise if a lot of money is involved.

Phil_MCR · #3 28.02.2021, 20:35

also make sure it isn't an asset still taxable in the UK e.g. UK real property

Landers · #4 28.02.2021, 21:39

	Quote:	fatmanfilms
	It's tax years, we had a discussion last year, it could be 7 years was the outcome. You need to take specialist legal advise if a lot of money is involved.

Guess what? I'm going to disagree with you. Please don't message me about it.
Let's look at what HMRC say:
"you return to the UK within 5 years of moving abroad (or 5 full tax years if you left the UK before 6 April 2013)"
"you were a UK resident in at least 4 of the 7 tax years before you moved abroad"
https://www.gov.uk/tax-return-uk

So it would seem to be calendar years for the OP. They can call call HMRC and check.
As someone else wrote check that the asset is not in any case something that would attract UK capital gains tax (like property) and I also believe there is an annual CGT threshold which you'd need to be over, currently £12,300.
Depending what the asset is and how much you made you could be liable to nothing or something.

fatmanfilms · #5 28.02.2021, 22:13

	Quote:	Landers
	Guess what? I'm going to disagree with you. Please don't message me about it. Let's look at what HMRC say: "you return to the UK within 5 years of moving abroad (or 5 full tax years if you left the UK before 6 April 2013)" "you were a UK resident in at least 4 of the 7 tax years before you moved abroad" https://www.gov.uk/tax-return-uk So it would seem to be calendar years for the OP. They can call call HMRC and check. As someone else wrote check that the asset is not in any case something that would attract UK capital gains tax (like property) and I also believe there is an annual CGT threshold which you'd need to be over, currently £12,300. Depending what the asset is and how much you made you could be liable to nothing or something.

Perhaps you would like to comment in this post from December I will quote it in f ll https://www.englishforum.ch/3256609-post19.html

	Quote:	bankman
	Based on the following two links it actually appears you need to be out of UK for seven years !! All those buying and selling shares in CH should take note if they plan to return to UK "Mr Simmons, who has lived all his life in the UK, leaves the UK on 5 August 2019. He returns to the UK on 2 September 2022. He realises a chargeable gain (on an asset acquired before he ceased to be resident in the UK) of £15,000 on 20 April 2020. For both 2019-20 and 2022-23 split year treatment does not apply and he was not Treaty resident in another territory in either of these years. Mr Simmons fulfils all the conditions in TCGA92/S10A*. 2022-23 is the period of return. 2019-20 is the year of departure. Period A ends on 5/4/20. The period of temporary non-residence is 6/4/20 to 5/4/22, which is 5 years or less. He had sole UK residence for at least four out of the seven tax years immediately prior to his year of departure. A chargeable gain accrues to Mr Simmons in the period of temporary non-residence. https://www.gov.uk/hmrc-internal-man...manual/cg26565 https://www.gov.uk/hmrc-internal-man...manual/cg26500

Landers · #6 28.02.2021, 22:48

The split year may be critical. If it's always tax years, why make a differentiation between pre and post-Apr 2013?
HMRC go on to say:
The rules on split-year treatment and capital gains are very complex. You should take further advice from a professional tax adviser or HMRC’s Residency unit if you are considering selling an asset. You can find out how to contact HMRC Residency unit on GOV.UK. We tell you how you can find a professional tax adviser in our Getting Help section.
https://www.gov.uk/government/organi...n-uk-residents

PoppyGirl · #7 28.02.2021, 23:30

Wow this is very interesting

But if you look atthis example :

https://www.gov.uk/hmrc-internal-man...manual/cg26568

"The period of temporary non-residence is 6/8/19 to 1/9/22. This is 5 years or less." You will see that actual dates have been used for esidency determination purposes - Not tax years

So I have to say I am inclined to think it is five years in duration rather than tax years (with tax years being longer and worse for the tax payer)

	Quote:
	Mr Klein, who has lived all his life in the UK, leaves the UK in the tax year 2019-20. He resumes tax residence in the UK for the 2022-23 tax year. He realises a chargeable gain (on an asset acquired before he ceased to be resident in the UK) of £15,000 on 20 April 2020. For 2019-20 split year treatment applies from 6 August 2019 and for 2022-23 up to 1 September 2022. There are no Treaty residence considerations. Mr Klein fulfils all the conditions in TCGA92/S10A. 2022-23 is split into two residence periods, i.e. non UK part 6/4/22 to 1/9/22 and UK part 2/9/22 to 5/4/23. The period of return is 2/9/22 to 5/4/23 because this is the first period after period A for which there is sole UK residence. Period A is 6/4/19 to 5/8/19. (the last period of sole UK residence). 2019-20 is the year of departure because it includes period A. The period of temporary non-residence is 6/8/19 to 1/9/22. This is 5 years or less. A chargeable gain accrues to Mr Klein in the period of temporary non-residence. In this example Mr Klein will be chargeable under Section 10A in the tax year of return to UK residence (2022-23) on the gain of £15,000. If the gain had instead accrued on 20 April 2022 then section 10A* would still be relevant because the gain would have accrued in the period of temporary non-residence.

Landers · #8 01.03.2021, 00:45

	Quote:	PoppyGirl
	Wow this is very interesting But if you look atthis example : "The period of temporary non-residence is 6/8/19 to 1/9/22. This is 5 years or less." You will see that actual dates have been used for esidency determination purposes - Not tax years So I have to say I am inclined to think it is five years in duration rather than tax years (with tax years being longer and worse for the tax payer)

Boy, it can get complicated. This example, which I find a bit hard to follow, is where "split-years" apply. The example given in Fatman's post was where split-years do not apply.

fatmanfilms · #9 01.03.2021, 10:15

	Quote:	Landers
	Boy, it can get complicated. This example, which I find a bit hard to follow, is where "split-years" apply. The example given in Fatman's post was where split-years do not apply.

Indeed, especially when HMRC guidance is not law & cannot be relied upon, as Robert Gains-Cooper found out. Thats probably why the legal advise I have received on 'domicile' goes further than the guidance on HMRC's website. The barrister who gave the advise needs to be confident he could win in court, should that be required.

PoppyGirl · #10 01.03.2021, 13:02

From HMRC in writing by email

Dear XXX

Thank you for contacting the Taxes Technicians

The period of non-residence in the UK is five years or less (this begins with the date on which an individual no longer has sole UK residence and ends on the day before he has sole UK residence again)

Please find attached the website address for the guidance we discussed.

https://www.gov.uk/hmrc-internal-man...asis/rdrm12610

https://www.gov.uk/guidance/capital-...rect-disposals

https://www.gov.uk/hmrc-internal-man...asis/rdrm12650

https://www.gov.uk/government/public...gains-tax-2020

Website address correct at time of call.

Yours Faithfully

Taxes Technicians

www.gov.uk

muze7 · #11 17.03.2021, 22:44

PoppyGirl, did you write to them or did you find an email address? Is the taxes technicians really HMRC, it sounds weird!

Just asking as I have been looking for an email address for years and never found an appropriate one!

CH_Me · #12 17.03.2021, 23:06

Non-residents now pay CGT on increases since April 2017. I sold one place before and one in 2019. The 2019 one I paid CGT on the increase from the valuation from April 2017 to the sale price.

A requirement for UK residents to report and pay capital gains tax (CGT) on disposals of UK residential property within 30 days was introduced in April 2020.

Non-residents have had this obligation since 2015.

https://www.gov.uk/guidance/capital-...perty#overview

Landers · #13 17.03.2021, 23:52

	Quote:	muze7
	PoppyGirl, did you write to them or did you find an email address? Is the taxes technicians really HMRC, it sounds weird! Just asking as I have been looking for an email address for years and never found an appropriate one!

https://www.englishforum.ch/3280715-post6.html

PoppyGirl · #14 18.03.2021, 17:22

This is from hmrc after I called the non resident cgt helpline and they put me through to a technician

I have now definitively confirmed that it is five years not tax or calendar years

If someone’s comes to Switzerland on 1 feb 2020 they can leave 1 feb 2025

muze7 · #15 18.03.2021, 21:04

	Quote:
	https://www.gov.uk/government/organi...n-uk-residents

The above link is from the Landers' post, very useful, many thanks! I wish they had such contact forms for UK residents!

I did find out that if you are UK resident and have a complicated question for self assessment (for example relating to dual residency and tax treaties), you can lodge a non-statutory clearance request and the transaction could be: the filing of a tax return (like for the current situation, if people are stuck working/living in the UK or CH due to corona, and if you are depending on a judgement from HMRC on the corona exception etc..)

I also did not know the helpline can provide written answers by email, so thanks for that as well

Landers · #16 18.03.2021, 21:48

	Quote:	PoppyGirl
	This is from hmrc after I called the non resident cgt helpline and they put me through to a technician I have now definitively confirmed that it is five years not tax or calendar years If someone’s comes to Switzerland on 1 feb 2020 they can leave 1 feb 2025

In your particular case. It's not the same for everyone.