Loafing Along

Your comment suggests you are selling a property, if so even as a UK Non-resident you are obliged to report that sale to the UK Inland Revenue within 30 days of the sale. There is a form specifically for this .

AliceCaroline

Thank you for that Loafing Along

I going to send for my Tax Portal password soon so I shall try and do the same.

Diddion

Loafing along - no, we are not selling a property; my wife and I are selling our business, which is a partnership and not a limited company.

Ozpretender

As the other poster said and I’ll repeat;

Until you become a resident in another jurisdiction you will remain a resident in the UK.

It’s not a case of, I will jump on a plane to Portugal today and will no longer be a resident in the uk from then on. Seriously think about it how easy would it be for anybody to do that and avoid paying taxes like you seem to think is the case.

Your not really explaining the situation well unless I missed it but it sounds like you want to leave the uk and become resident of Portugal to avoid paying tax on sale of a business in the UK? I can’t really comment about the specifics of selling a business but you mentioned capital gains not on physical property. I know if you own shares as an Australian resident (commonwealth country so I would guess very similar rules to UK) and you want to move and become a resident elsewhere and you want to do it legitimately then you will be taxed on your gain up to that point without even having to sell the shares, deemed disposal or something like that they call it. You will then be full up to date with the taxman if that’s your goal

Your simplifying a complicated matter and by the sounds of it you haven’t talked to any professional about this. If you have they are giving you very bad advice. I’m sure the UK tax office can answer all your questions?

Diddion

Ozpretender - thank you, but I have in fact received formal advice from an international tax adviser based here, in the UK, and am following their pathway. I think one needs to be careful of the specifics, here. We are not selling shares or property, and the UK tax year ends on April 5th so, since we’ll be signing on the 6th and leaving the country on the same day, the UK will not have taxation rights. Indeed, this was exploited in the past (with people leaving the UK, crystalling capital gainswithout incurring a tax liability, and returning the following year, that a new status of Temporary non residence was introduced. If someone returns to the UK within five years, gains made in that period will become taxable, and from the UK perspective this would be subsequently be taxable.

The UK does not have a deemed disposal arrangement, such as you mention, for emigrants.

Here is another webpage on the matter: https://www.wealthprotectionreport.c...-Gains-Tax.cfm
So, despite one’s natural amazement, I am confident about this! And Portuguese taxation rights start from the date of entry - Portugal, since 2015, operates a split year tax treatment. I can find no argument that this wii not work

Ozpretender

Looks a lot different to Australia and looks like your all over it. All the best with it.

Diddion

. Thanks for your input, Ozpretender. I’ll let you know if I eventually come a cropper!

Ukkram

The UK does not have the "deemed sale" of movable property such as shares on the day of emigration.
What is quite clear is that capital gains can only be payable to the country of residence. What is not clear is the date of residence. There may be a conflict between the DTA and domestic laws on this and I am in a long term dispute with PT IRS on this issue.

RichardHenshall

A DTA is unlikely to be involved if there is a realistic proposition that no country can claim taxation rights as it's usually used to decide between two countries who can claim rights.

Ukkram

The DTA is a legal contract between countries and must be applied so your statement is moot.
I state again. CGT on movable property is only taxable in the country of residence. No decision needed to claim any rights to it as per the DTA.

Diddion

This is getting confusing!

So who thinks I’ll be deemed resident somewhere, and will hence suffer tax on the sale of our business?
Who doesn’t think this?

dingg

Diddion

take no notice of us lot , you have advice from a specialist take it, and good luck , you may well have found a usable quirk/loophole call it what you will :-)

Mac and Mabel

Whatever the rights or wrongs, if you plan to apply for NHR status in Portugal then you could encounter further confusion. As I understand it, for one's first year of being PT tax resident, only income since becoming resident need be declared in Portugal, but if one has NHR then all income arising within that whole tax year must be declared.

Ozpretender

I don’t want to go against what a supposed international tax advisor is saying to the OP but from my experience I feel he is not getting good advice. It’s simply too easy what he plans to do and international tax planning is far from easy. You are always taxable somewhere, it just depends on your residency, how beneficial the tax laws are in that jurisdiction and the OP seems to think it is as easy as moving to another country to lose that residency status and to become free as a bird tax wise. There are many things that need to be considered. This article touches on some things that need to be considered when trying to become a non resident.

Good International tax advisors are expensive but for peace of mind they are worth the money. Your talking maybe £500 per hour for advice and even then there is a big difference in what your can Be paying for. If your paying £100-200 then I can say with a high probability he is not getting good advice.

This article although old now outlines many of the things that are needed to sever ties/become a genuine non resident with no repercussions down the track.

https://www.taxcafe.co.uk/resources/howtobecomeataxexile.html

He is an an extract from the article but it’s worth reading in full.

“UK Business
If you own a sole trader business or a share of a partnership based in the UK, you will be subject to UK tax on your profits.

If you own a UK company, you generally can’t take it with you when you become non-resident. Its profits will usually continue to be subject to UK corporation tax. From April 2011, the tax rate is 20% on the first £300,000 of profits.

The after-tax profits can, however, be extracted by way of a dividend which could be tax free if you live in a tax haven.”

And these little nuggets too which seems to be exactly what the OP is intending;

“It seems that HMRC’s main grudge is against those who want to have their cake and eat it: by keeping a home and business interests in the UK, while also claiming non-resident status.”

“Possibly the most difficult tie to sever could be your business interests in the UK. Those who retain business interests in the UK face the possibility of having their non-resident status challenged.”

I don’t want to say you have been getting bad advice because that’s not my place to say that and I’m not a professional but just be very careful of the advice you are getting because the only one who will be held accountable in the long run is you.

dfjordan

I would agree with Ozpretender. I was not resident anywhere for about 4 years, but before getting to that situation I was resident in Bermuda for 3 years, and there’s no income/capital gains taxes there anyway. I also became non resident anywhere, as I literally lived out of a suitcase , and when asked the question at immigration, where I returned to when I wasnt travelling , I could honestly answer that I actually didnt stop travelling. ( I had an unusual job !)
I dont want to doubt the professional advice that you have received, but would warn, that even professionals sometimes get it wrong, and when they do, it’s the client that gets penalised, not the professional. A good example of this was the “watertight” system recommended by some professionals to a number of very high income footballers etc , that would theoretically enable them to significantly reduce their taxes, was recently thrown out by HMRC resulting in exorbitant back taxes being assessed. I suggest you get at least one more specialist opinion, preferably in your case, one who is specialised in Portuguese tax , if that’s where you are planning to set up home.

During the last 10 years or so in my prifession, I specialised in international corporate taxation, but when asked the question by individuals as to how to avoid or minimise their taxes, I used to suggest they rather decide where they would be happy to live, and choose there, even if that meant paying taxes. Example, assuming there have been no changes recently, Costa Rica has no tax for foreigners, but do you want to live there ?