CGT - Resident in Dubai

GuidoT

I have worked in Dubai for the last ten years and for tax (or rather no tax) purposes resident there.

I purchased a property that I let out in the UK about 4 years ago and it has increased in value by about £80K.

If I sell whilst in Dubai would I have to pay UK CGT on all the £80K gain (subject to my CGT allowance).

If the answer is no CGT, then if I return to the UK, do I only have to pay CGT on the increase for the period I am back on a pro rata basis, e.g. £100K over 5 years, then I would pay CGT on the £20K increase (subject again to my CGT allowance) or does it default to the full sum?

Thank you in advance for your responses.

pjclar02

Providing your time in Dubai has meant that you have been non UK resident for the whole of that ten years, then providing you sell the property whilst you are in Dubai there will be no UK capital gains tax liability on its disposal as you will have been non UK resident for five complete tax years.

GuidoT

Yes non UK resident for 10 years.

What about if I return to the UK and sell (as above).

cinderfella

You create the tax event while outside the UK (during a non resident tax year). There is no pro rata.

GuidoT

cinderfella I do not understand your post.

Are you saying if I sell when I return to the UK I face:

1. CGT on the entire £80K (less my allowance)
2. No CGT

pjclar02

If you sell at any time during which you are UK resident, it will be fully taxable. There is no time apportionment.

You could mitigate your liability by moving into the property for a while

bartnwood

GuidoT wrote: »

cinderfella I do not understand your post.

Are you saying if I sell when I return to the UK I face:

1. CGT on the entire £80K (less my allowance)
2. No CGT

Hello GuidoT,

Yes you will be liable for CGT if you sell whilst resident in the UK, if you sell whilst you are resident in Dubai before your return to the UK it will be exempt.

Feel free to pop in and see me on SZR if you need any further assistance

voyagerbear

Pjclar02 could you please explain how you can mitigate the liability. Thanks

pjclar02

voyagerbear wrote: »

Pjclar02 could you please explain how you can mitigate the liability. Thanks

The liability could be mitigated by moving into the property for a period, and having it as the only or main residence. This way a proportion of the gain arising would be exempt from capital gains tax.