Shelter’s Income and expenditure figures highlighted13:57 PM, 4th February 2019
About 2 weeks ago 35
Did you know; if you become non-resident for tax purposes you only pay CGT on capital appreciation since April 2015 on your rental properties?
A few weeks ago I shared a tax planning strategy based on this (link here) and since then I have already been contacted by four landlords who are now residing in the Southern Hemisphere. It is good to know that Property118 now reaches UK landlords living all over the world.
In this article I would like to share an example of how big the savings can be.
Mr X has dual nationality and now lives in New Zealand. His London based property portfolio is worth £19 million and his acquisition costs were £6 million.
If he still lived in the UK he would pay tax on £13 million of capital gains assuming he was to sell today, the CGT bill on which would be a whopping £3,640,000.
However, he’s now obtained a professional value of his property portfolio backdated to April 2015 at £18 million, which is broadly in line with the HM Land Registry House Price Index for London. This means that for CGT purposes as a non-resident he would only pay £280,000 on tax based on the £1 million capital gain since April 2015.
That’s a tax saving of £3,360,000.
The good news is, even if you are currently resident in the UK, it isn’t too late to take advantage of this for yourself.
For example, if you become non-resident for UK tax purposes at any time before the end of March 2018 you will qualify for non-resident CGT rates from April 2018 onwards.
Just in case you didn’t already know, I took advantage of this back in Feb 2016 and became resident for tax purposes in Malta. You don’t need to live in Malta or New Zealand to benefit from non-resident CGT in the UK. You can live anywhere in the world except for the UK.
If you would like to discuss this further, and perhaps the rules on how much time you can then spend visiting the UK, please book a tax consultation with me via the button below.Show Form To Book A Tax Planning Consultation
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