Do I pay Capital Gains Tax if I sell assets while living abroad temporarily?

Full answer

The temporary non-residence rules are an anti-avoidance measure that catches people who go abroad, realise large gains while non-resident, then return to the UK. Without these rules, someone could move overseas for a year or two, sell shares free of UK Capital Gains Tax, and come home -- so HMRC reaches back to tax those gains. How it works: the rules apply if you were UK resident for a sufficient number of years before leaving, your period of non-residence is 5 years or less, and you then resume UK residence. If you meet those conditions, certain gains you made during the non-resident period become chargeable in the UK tax year you return. In practice the gains are treated as arising in your year of return and taxed alongside that year's other gains. What is caught: typically gains on assets you already owned before you left the UK, such as a share portfolio. Gains on assets you both bought and sold entirely while non-resident are generally outside the charge. UK land and property is treated separately -- non-residents are usually already within UK CGT on UK property regardless of these rules. The applicable CGT rates are the standard ones: 24% on most assets for higher-rate taxpayers, 18% to the extent gains fall within the basic-rate band, and the annual exempt amount of GBP 3,000. Business Asset Disposal Relief at 18% may apply to qualifying business disposals. Who it affects: anyone planning a short relocation -- a secondment, a sabbatical, or a couple of tax years overseas -- who is sitting on substantial unrealised gains. The precise residence tests (the Statutory Residence Test) and the exact qualifying years are detailed, so check gov.uk and take advice before relying on a sale being tax-free. Use a CGT calculator to estimate the bill on return.

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