How to avoid capital gains tax on my stocks

masters02

Hi all,

I've recently joined TD Direct and purchased some equities, and I am adamant on finding a way to avoid capital gains tax.

I understand that for the UK, an ISA would be great for that, however, I'm planning to move abroad (I can't get an ISA when I'm abroad) and was wondering what my best options would be.

I'm aware that if you are a resident of a select few countries (e.g. Hong Kong and Singapore) you can sell foreign equities and incur no capital gains tax.

However, if you move to countries without this tax break (such as Canada) my understanding is that if you sell foreign equities you would have to pay capital gains tax to the Canadian government.

So to cut my ramblings short, aside from being a resident of countries such as Singapore where I can benefit from CGT breaks, what other loopholes are there for to avoid CGT on my equities?

Would sincerely appreciate any advice!

Mistermeaner

I think you should pay your tax

jimjames

My understanding is that you cannot add more money to an ISA once you are abroad but nothing to stop you keeping the money already in it.

So you could get £30k into ISAs between now and 6th April that would remain tax free.

Biggles

How much are you thinking of investing, and are you talking of making a single cash injection before you leave the country or on an ongoing basis?

As long as you crystallise no more than the exempt amount each year (currently £11k - that's gains, not proceeds), you won't be taxable; you can sell a certain amount every year to ensure that.

If you are only making an initial cash injection of up to £30k, you can open a S&S ISA and put £15k in by 5 Apr and another £15k just afterwards. You can then buy and sell within your ISA even after you've moved abroad, you just can't add any more money. You can't do much about the shares you have purchased unless you sell them, put the cash in the ISA and buy more.

Spidernick

How long are you moving abroad for? If 5 years or more then you'll break UK tax residence for CGT, so any gains wouldn't be taxable in the UK if sold while not resident under these rules. Otherwise if you buy and sell in complete UK tax years when not tax resident in the UK then you'd also avoid UK CGT.


If you don't meet the five-year rule then note that all chargeable gains are rolled into the year of return, so you lose out on annual exemptions for the interim years if sales are made.


In all instances you'd need to look at the CGT in any other country you are tax resident.

CLAPTON

makes no sense

if you are living abroad you need to know the rules in your host country

bowlhead99

jimjames wrote: »

So you could get £30k into ISAs between now and 6th April that would remain tax free.

Free of UK tax. Most countries will tax you on your worldwide income, some will also tax you on your worldwide gains as the OP suggested.

Foreign governments don't usually recognise preferential local savings schemes like ISAs, although pensions are usually explicitly referred to in tax treaties between countries and so are relatively more 'robust' for planning.

There is an HMRC helpsheet covering temporary non residents and CGT which may be relevant for someone going abroad for a while and coming back.

Really nobody can tell you how to shelter your international gains while you are living in a country if you don't even know what country you are going to be living in. And the chances are that when you do, there will still not be a lot of people with experience of living in it.

If you are a Canadian resident and taxpayer and want to avoid Canadian tax, use Canadian tax wrappers - TFSA, RRSP or whatever. In the US, a Roth IRA is similar to an ISA in concept but is designed to be longer term with limits on tax free withdrawals of the earnings element of the total account (you have to be 60 or have kept the money in 5 years). If you are in Hongkong or Guernsey or Dubai you don't need a special account because they don't have capital gains taxes.

So, decide where you want to go and live, then find out how to invest efficiently from there. You don't need a loophole you just need to decide where you are going and find out what other people there do to avoid paying gains taxes.