UK : Using 30 day wash rule to my advantage before moving to India

BlisteringBarnacles

British naturalized citizen in UK with investments in US. No US Green card or Citizenship (non resident alien)

Let us say I am sitting on considerable capital gain in AAPL shares in US. This is offshore investment from UK standpoint from unremittted money. I pay tax on arising basis in UK on any dividends etc even if I do not remit.

If I am going away to India for a few years, here is strategy to realize my AAPL gains with very little tax without the help of tax havens : will this work ?

1. Plan to become non resident in UK from April 2025
2. In March 2025, while UK resident, sell AAPL and buy back within 2 days.
3. Say I bought the asset 18 years ago at $10 a share, I sell it at $100 in March 2025, but it back at $101 within 2 days.
4. No UK CGT because of 30 day wash rule
5. After relocating to  India in Apr 2025, sell the asset for say $105. India tax will be only on 105 - 101 = $4 since India does not have 30 day wash rule and cost basis would be $101
6. wire the money into UK in the usual pool of investments. Interactive Investor says they will accept new money even after I become non resident.
7. Stay non resident from UK for 3 years

Would Step 6 then be taxable in UK ?

I have 3 pools of US money :
1) Former employer shares - no its not AAPL
2) Etrade : VTI : Vanguard Total Stock Market Index Fund ETF.
3) Vanguard : VTSAX : Vanguard Total Stock Market Index Fund US : This is non reporting Fund so far as HMRC is concerned

If my trick works, it will work only for (1). It will work for (2) but Etrade will not allow me to buy back VTI while I am UK resident so Step 2 will fail. The trick probably wont work for (3) since 30 day wash rule etc probably dont apply for non-reporting funds.

But (1) is a sizeable chunk for me so it helps.

Thanks !

BlisteringBarnacles

I guess this is an international tax question. Or perhaps I should have posted on tax forum.

In any case, If you sell an asset and buy back the same within 30 days in UK in a taxable account, there is certainly no capital gains tax in the UK, am I right ? And this applies to onshore shares / unit trusts and offshore shares / mutual funds / ETFs which have UK HMRC distributor status ?  I guess so, but wanted to check.

Regarding India treatment of capital gains and 30 day wash rule, I will find out on my own. 

Appreciate any thoughts

EthicsGradient

BlisteringBarnacles said:

I guess this is an international tax question. Or perhaps I should have posted on tax forum.

In any case, If you sell an asset and buy back the same within 30 days in UK in a taxable account, there is certainly no capital gains tax in the UK, am I right ? And this applies to onshore shares / unit trusts and offshore shares / mutual funds / ETFs which have UK HMRC distributor status ?  I guess so, but wanted to check.

Regarding India treatmeno capital gains taxnt of capital gains and 30 day wash rule, I will find out on my own. 

Appreciate any thoughts

It's not that "there is no capital gains tax" if you buy back within 30 days; it's that the cost basis for what you sell becomes the purchase you made in the 30 days after it (purchases made on the same day come first, in fact), and then the cost for the asset you're still holding after the 30 days becomes the purchase you had made "before all this". In practice, price movements are likely to be small in those 30 days, so, after costs, there's a good chance there'll be no capital gain for the sale. 

As to how the Indian system will see all this, I've no idea - I think you'd do better looking on a specialist forum for ex-pats or those moving between India and the UK.

BlisteringBarnacles

Thanks for your detailed reply JamesRobinson48. Makes sense that if I returned to the UK I would pay the full UK tax as I would have, had I been resident in UK all along.

I believe it is 5 years for UK investments and only 3 years for offshore.  My AAPL (just an example) were purchased with US funds which were earned with US salary before I entered UK. I have not remitted a single penny out of those into UK while I continue to pay tax on arising basis on offshore dividends, interest and capital gains.

While I want to continue to live in UK, my personal circumstances are such that I may be forced to leave. (health and family reasons). In that case, doing what I suggested probably makes sense. Looks like selling and buying back within 30 days during UK residency certainly isnt going to hurt anyway.

Cheers