Ask Money: what are the CGT rules for UK non-residents?

Laura Sant of Carthy Accountants helps a reader with a question about tax.

For tax purposes, I am resident in Australia, where I have been living since 1974. I have some M&G investment funds that I have held in one form or another since 1983. If I were to sell these shares, would I be subject to CGT and/or withholding tax, and how much would I have to pay? Would M&G act on behalf of HMRC and retain the tax payable, or would it deposit the gross proceeds from this sale in my UK bank account?
Joseph Zekan, by email

Dr Laura Sant, director and international tax specialist at Carthy Accountants (part of the Experts for Expats network, expertsforexpats.com), replies:

Capital gains tax is not charged on the sale of shares for UK tax non-residents, as long as they remain non-resident for a period of at least five years. As things stand, the only exception to this would be if you were making an indirect disposal of UK property or land by selling the shares (which is unlikely to be the case with an investment portfolio). This is because you need to have a holding of at least 25% in the company that holds the UK land and property as an investment.

Therefore, if you dispose of your investment portfolio, this will be outside the scope of UK taxation and will not need to be declared to HMRC. M&G will pay you the gross proceeds from the sale of the shares. From a UK tax perspective, it’s an ideal situation. However, it is worth speaking with an Australian tax adviser about your Australian tax obligations before you dispose of the shares, because the Australian tax authorities would have a right to tax these gains.

If you need help with a tax, pension or financial planning problem, please email: moneyobserver.ed@moneyobserver.com

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