CGT (Capital Gains Tax) on Investment flat (pensioner moving abroad)

In message , snipped-for-privacy@gmail.com writes

To be sure of avoiding CGT he needs to state his intention to become non-resident, and remain so for at least 5 years, before being sure that CGT will not be due. This always assumes that the law does not change in the meantime.

Do you have to state intention to become non-resident or just be non-resident for 5 years to be CGT free?

Mark BR

In practical terms, you need to state it formally, and I believe he has until July 6th to make the declaration for 2006/2007.

In message , Mark BR writes

Everything I have read suggests that you complete Inland Revenue Form P85 "Leaving the United Kingdom".

Not sure if you have to, but it seems sensible to make things clear, particularly as passports dont get stamped in Europe.

Regds

Stamping of passports is irrelevant. If they did get stamped, it would only prove where you physically were on certain dates. That is not enough to prove non-residency.

However, if you could prove residency somewhere specific (and surely in most of Europe you are required to register residency unless you're merely visiting), that should suffice as evidence of non-residency everywhere else.

Not sure what you'd do when you're residing on a boat, since you'd technically not be resident anywhere. Worse: if you live on a UK registered vessel, that might make you a deemed UK resident! I dare say you'll have looked into this, in case you need to cash in part of Faulkner Towers.

My landlord has already registered his intentions to leave the UK, by completing P85 (2006/2007).

However, should he wait to sell the flat to us until April 2007 (to avoid paying CGT in 2006/2007) or is he exempt as soon as he moves to Cyprus (ie in August 2006 he will have moved and will be renting a house in Cyprus?).

Essentially, should he sell the flat immediately, or in August 2006, or in April 2007?

You may recall my wanting to change a house converted into 7 flats on 1 freehold, into 7 separate leaseholds. Doing this would have created 7 disposals for CGT purposes, and an immediate liability for CGT. Needless to say, I didnt do it.

Having taken some legal and tax advice, and having read every government document I can find on the subject, it seems I can become non resident by living on a boat, (being careful not to stay anywhere for long enough to become a resident), and will not be subject to CGT on UK disposals after 5 full tax years.

The consensus is that any less than 5 years may leave any disposals subject to the tax.

I may not need to cash in, but I will definitely be creating the separate leases, if only to realise the gain without actually selling.

If the landlord has declared his intentions to become non-UK resident (ie P85) and moves to Cyprus in August 2006, will he be exempt from CGT, when he sells his flat to us in June 2006? If he has to pay CGT, he will wait until next year, before he puts his property on the market (by the way he has no intention to return to the UK in the next 5 years+).

We would like him to sell now, but he wants to avoid CGT on this investment property.