Capital Gains For The Non-UK Resident Individual

The basic rule is that a charge to UK Capital Gains Tax arises when an individual who is resident or ordinarily resident in the UK disposes of a chargeable asset that is situated anywhere in the world.

By contrast, a person who is not resident or ordinarily resident in the UK is only chargeable to UK capital gains tax on the disposal of assets that are situated in the UK and that are used for the purposes of a trade, profession or vocation carried on in the UK through a branch or agency.

Capital gains tax is only payable when the total gains exceed the annual exempt amount. For the tax year 2006/07 this is £8,800 and is available to each spouse where jointly owned property is sold.

To be outside the charge to UK capital gains tax the taxpayer must remain non-resident for at least five complete tax years for a gain realised in the intervening years. Where the taxpayer returns within this period the gains (and losses) are treated as arising in the tax year of return to the UK.

It should be noted that capital gains that arise in the tax year of departure remain chargeable to capital gains tax, even if made in the period between the date of departure and the end of the tax year, save for those taxpayers who are non-resident for at least four of the seven tax years prior to the year of departure, who continue to have the benefit of the "split year" treatment.