Capital gains
Introduced in 1965, Capital Gains Tax (CGT) is a tax on the gains made on the disposal of assets made by UK taxpayers. There are some exemptions, particularly surrounding land and property. All land and property are subject to UK CGT regardless of whether the individual is a UK resident.
Annual exemption
For the 2024-25 tax year, the first £3,000 of capital gains are exempt from tax, regardless of your other income. There is no tapering for this allowance, unlike the income annual allowance of £12,570, which is tapered for individuals with more than £100,000 of adjusted income.
The rates of CGT above the annual exemption are currently 10% for basic rate taxpayers and 20% for higher rate taxpayers, with different rates for property gains at 18% and 28% (24% from 6 April 2024). However, some asset disposals qualify for lower rates of relief or are covered by other specific exemptions. The most common example is selling your only home for a gain that has always been your primary residence.
Reporting requirements
You must ordinarily report any capital gains to HMRC if the disposal proceeds were over £50,000 or if you made a gain above the annual exemption of at least £3,000. You should also report any losses that can be carried forward on your return to reduce future gains.
The deadline for reporting capital gains is 31 January following the end of the tax year. So if you made a gain on 31 March 2024 it would fall in the 2023/24 tax year and would be reported on your 2023-24 tax return which would be due to HMRC 31 January 2025.
60-day deadline for property gains
The rules for property are different and the gain must be reported on a property account form and paid to HMRC within 60 days of completion. It will also still need to be reported to HMRC on your tax return and the tax already paid will be deducted.
Non-Dom status - abolished from 6 April 2024
Individuals who were not born in the UK may qualify as non-dom. This means they are not domiciled in the UK. If they make disposals of assets abroad and do not remit these to the UK, then they may be able to avoid UK CGT by claiming the remittance basis, although they may still be liable for CGT in their home country.
Deemed Domicile
You will be automatically deemed UK-domiciled for tax purposes if you have lived in the UK for 15 of the last 20 tax years immediately prior to the relevant tax year. You cannot claim the remittance basis if you are deemed domiciled and will be required to report your gains to HMRC like a UK-domiciled taxpayer.
Temporary Non-Residence
If you are a UK non-resident, then any capital gains realised during non-residency would not be taxable in the UK. However, there are rules to discourage taxpayers from moving abroad to a country without capital gains taxes to realise their gains before moving back to the UK in the following tax year.
The Temporary Non-Residence rules mean that if you become a UK resident again within 5 years of disposing of an asset, it will be chargeable in the tax year of your return. The rules do not apply to gains made on assets acquired outside the UK during non-residency.
Get professional advice specific to you!
The rules on residency and domicile are incredibly complex, and we strongly advise you to seek specific advice from our tax team for your circumstances. If you plan on selling an asset, please get in touch with us so we can advise how to mitigate your tax bill. Even the slightest mistake can result in a large tax bill, and some tax planning now can go a long way!
Consider the tax rules of the country you are in
We can advise on UK tax but cannot advise on tax rules in other countries. If you have assets in other countries, make sure you also obtain professional advice that covers both sides of the equation. The laws of that country may have changed since you moved there.