Tax implications for UK expats relocating back home

Published:  12 Oct at 6 PM
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Whether the decision to return to the UK is based on fears of Brexit effects, family reasons or simply because you’re missing the home country, it’s wise to check your tax position before you make the move.

For expats moving back to the UK from EU member states it’s fairly straightforward providing you’ve maintained your non-resident status. However, for those returning for farther-flung locations, it’s best to get advice on tax liabilities as regards selling your overseas home, investments and unwanted belongings.

For example, UK citizens who’ve spent time living in British Overseas Territories such as Gibraltar and the Cayman Islands need to undertake a few planning sessions before booking a flight, especially if there’ve been regular visitors to family in the UK. Confirming non-residential status ensures appropriate treatment as regards UK taxes including capital gains tax on the sale of property overseas.

Non-resident UK citizens are not taxed on the sale of their overseas homes, home contents, cars, items of value or investments sold at a profit before they return to Britain. However, it’s wise to check local tax laws on such sales before leaving. In the UK, exemptions from capital gains tax apply to assets such as cars or items valued at less than £6,000.

Profits from the sale of residential property belonging to UK expats living in British Overseas Territories are also exempt from capital gains tax provided properties have been expats’ main or only homes up to the last eighteen months before the sale. This allows returnees to relocate before the sale takes place.

The process for the sale of investments such as stocks and shares is slightly more complicated unless the investments are sold before the move takes place, at which time no capital gains tax is due. However, residency is considered on a full tax year basis, meaning that arrival in the UK part-way through the current tax year may lead to capital gains tax on investment sales.

Basically, it’s safer to sell assets in one tax year and move back to the UK during the following tax year. Until 2013, non-UK residents had to spend less than 183 nights in the UK during any one tax year to qualify for non-residency. The rule change included a reduction in the number of nights allowed to 46, with those unable to comply becoming subject to more complex requirements in order to retain non-residency.
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