CGT Questions

User232002

In 2015, I made a small investment in Bitcoin. I have also continued to invest at various points in 2016 and 2020. Over the intervening time period, this investment has obviously appreciated considerably. I have no intention to sell this asset for another few years as I still think it has some room to appreciate, however I would like to investigate the CGT tax liability and situation. I have two main issues.

1. My fairly rudimentary understanding of CGT is that, since no gain has yet been realized, I did not have to submit any CGT information in previous years. CGT only becomes due when the asset is sold and the gain is realized. Is this correct?

2. I am lucky to be able to have a job that allows me to, relatively easily, work anywhere in the world with only a small difference in earning power depending on the location. If I was to secure a job in a tax efficient jurisdiction (say Bermuda, Bahamas/Cayman Islands, Channel Islands or UAE) would I then be able to dispose of some of my assets and avoid UK CGT? If I was to do this, I would engage the services of an accountant of course as I am aware there are certain requirements to be exempt from UK tax (ie. the 3 year rule - but I am willing to live in these locations for 3-4 years if needed). I haven't specifically looked in to the CGT rates of each of the places mentioned, but I am assuming they are somewhat more generous than the UK system and just want to know whether this idea is one that would work in principle? 

blueplanet2020

Yes to both 1 and 2.  For 2 you would not be ordinarily resident in the UK and thus not liable to UK taxation at the time.

Jeremy535897

The answer to question 2 is complex, as you appreciate. If you relocate to a tax haven, it can be harder to lose UK residence/ordinary residence, but with a 3/4 year time frame, you should have no problem.

User232002

Many thanks for your quick responses!

jimmo

Simply achieving non-residence will not be sufficient for your purposes.

If you are temporarily non-resident in the UK any Capital Gains which arise during your temporary absence will become chargeable in the UK  in the tax year of your return.

A temporary absence is defined as 5 years or less.

CG26565 - Capital Gains Manual - HMRC internal manual - GOV.UK (www.gov.uk)

 

I am not sure whether that refers to tax years or calendar years so you may need to plan to be away for a minimum of 5 complete tax years.

Jeremy535897

I think this (was section 10A TCGA 1992, now section 1M) is unlikely to apply in circumstances where OP will be treaty resident in the other country. It is more aimed at peripatetic individuals who have no residence elsewhere, but it will catch individuals resident in a country with which the UK has no double tax agreement addressing residence (out of OP's list, I think only the Bahamas falls into this category). I think the 5 year period is calendar, in that if the split year rule applies, it will start from the date in the tax year that the non-UK residence starts, otherwise it will start on the 6 April of the first year of non-UK residence. As OP has said, it is important to take detailed tax advice before embarking on this course of action.