[The second in a 2 part series on the tax implications for expats to consider when returning to the UK.]
Realise Gains Before Returning Home
If you have investments that are subject to CGT, then it is probably desirable to realise any gain before returning home. This excludes offshore roll-up funds and offshore insurance bonds which are not subject to CGT.
The 30 Day Rule
However, assuming we are talking about CGT covered investments, then particular care needs to be taken with timing. For example if you plan to simply sell an asset, realise the gain and then repurchase it, you need to be aware of the “30 Day Rule”. This rule matches a sale with a subsequent re-acquisition if they occur within 30 days of each other and effectively nullifies the earlier gain (thus maintaining the original base cost).
This rule however, does not apply if you repurchase the investment while you are still not resident or ordinarily resident in the UK.
On the other side of the coin, if you have an investment where the disposal would result in a loss, then ideally you should hold on to it until after your return so as to allow the loss to be offset against future capital gains. Obviously you should consider whether this delay would result in further losses and whether these additional losses (or risk of such) negate the potential benefit.
Don’t Forget to Convert the Currencies
It is important to note that when calculating a gain for UK tax purposes, the cost and sale proceeds need to be stated in GBP terms. So, if for example you own a shares that are USD denominated, you need to convert the purchase price and sale price into GBP using the exchange rate that was in effect at the respective dates.
It is therefore possible that a chargeable gain could still arise for UK tax purposes even though there is a loss in the underlying currency. Alternatively, there may be a loss that could be offset against future gains even though the investment has made a gain in its base currency.
There are, of course, many other issues that should be addressed if you want to maximize your tax planning opportunities when returning home. The purpose of these 2 articles is simply to give you an idea of the direction in which you should be heading.
The key point in it all, is that these issues should be addressed BEFORE you return to the UK.