Test your understanding: answers
(1). The circumstances in which an individual may be regarded as a temporary non-resident for the purposes of CGT are:
- the individual has been UK resident for at least four of the seven tax years prior to the year of departure from the UK, and
- the individual is absent from the UK for a period of five years or less.
(2). Eider will not be UK resident when she sells the two properties. However, she will be a temporary non-resident, as she has been UK resident for at least four of the seven tax years prior to the year of leaving the UK and will be absent from the UK for a period of five years or less.
Any gain on the sale of property 1 will be subject to UK CGT in the tax year of her return to the UK as the property was acquired before Eider left the UK.
Any gain on the sale of property 2 will not be subject to UK CGT under the temporary non-resident rules because the property was acquired during Eider’s period of absence from the UK.
(3). For the purposes of UK IHT, Sparrow will be deemed domiciled in the UK for three years following his emigration to New Zealand. Accordingly, if he were to die prior to 30 June 2021 he would be subject to UK IHT on his worldwide assets. If he were to die after 30 June 2021 he will only be subject to UK IHT on his assets situated in the UK.