Originally posted by NotAllThere
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http://business.timesonline.co.uk/to...icle713162.ece
Is it still feasible for one to become a fiscal nomad for a year before living permanently overseas in order to realise capital assets free of capital gains tax prior to investing them in an offshore trust, or later to avoid IHT? Anon, Somerset
Mike Warburton: The guidance on matters like this are contained in the publication from HM Revenue and Customs (HMRC), IR20. It is possible to become a fiscal nomad without having a residence in any particular country. You may travel to various countries and, in any event, countries have different rules that they apply to determine residence.
If you are moving abroad permanently, but do not want to be trapped for CGT in the country you are moving to, it can be attractive to become a fiscal nomad for a period after the 5th April following your departure from the UK, but before the start of the tax year in the new country. Unfortunately, HMRC are likely to need some persuading in circumstances such as this that you have genuinely ceased to be UK residents if you are not able to show that there is a particular country that you have moved to. It may be advisable to spend a sufficient period in a suitable third country with a favourable tax regime, such as a tax haven in which you become resident for a limited period before moving to your permanent country of residence. Ultimately, it is a matter of fact and evidence and the onus will be on you to prove to HMRC that you have ceased to be UK resident. If you return to the UK within five tax years of the year of departure, the capital gains will be payable in the UK on your return.
Whilst this may help your CGT position, it does not necessarily improve your inheritance tax position. Inheritance tax is determined by your domicile, rather than your residence, and if you have started life with a domicile in the UK, it is very difficult to change it. You would need to show that you have ceased to have any ties with the UK and that you have left the UK for at least three years before you could argue that you have changed your domicile Even if you are able to change your domicile, any assets located in the UK will remain subject to UK inheritance tax (which is normally charged on your worldwide assets).
See also:
http://www.internationaltaxadviser.c...nt/view/34/54/
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