Tax Free Window for Non-Doms?
If you are a ‘non-dom’ resident in the UK, you may have a one off opportunity between now and April 2019 to bring money into the UK tax free.
This tax free window may have been aimed mainly at UK resident individuals with millions in ‘mixed accounts’ offshore (i.e. offshore accounts containing a mixture of funds acquired before the individual became UK resident and income or profits realised since then) but it can apply to others who may never have given much thought to the ‘non-dom’ tax rules. For instance, it could apply to someone who moved here for employment and has only UK earnings but who still owns assets overseas.
If you own an overseas property, bought with earnings from before you arrived in the UK five years ago, you could sell the property now and bring cash equal to the original purchase price into the UK without paying any UK tax. If, however, you wait until after 5 April next year it would be impossible to bring any of the proceeds of sale to the UK without triggering some UK tax.
By way of example, let’s assume that before you moved to the UK you bought (or inherited) a house worth £400,000 which is now worth £800,000. If you now sell and split out the proceeds, you could bring £400,000 (representing the original purchase price) to the UK tax free, leaving £400,000 offshore to buy a smaller base ‘back home’. If, however, you do the same this time next year, then you may have to pay as much as £112,000 in UK tax.
Of course, as with all things to do with tax, the qualifying criteria are not straightforward, so before you rush to sell your overseas property or investments there will be steps to take. First of which should be to check if the tax free window applies in your case and then if, in fact, any tax saving justifies a sale sooner rather than later.
If you would like to discuss this further please contact Paul Fairbairn on +44 (0)1892 506 350 or at email@example.com