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Moving back to UK - income and capital gains tax

Moving back to UK - income and capital gains tax

Old Jun 28th 2023, 5:55 pm
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Default Moving back to UK - income and capital gains tax

Hi All,

I lost my job at the end of Feb and we are now considering moving back to the UK after a fruitless job search thus far in the U.S. Situation as follows:
  • Here with my wife and 2 children all on Green Card
  • Employment ended 23rd Feb 2023
  • Severance package received end March and end May 2023
  • We have owned a property here in the U.S for 3 years - this has been our main residence. We have property in the Uk which has been rented out throughout.
  • We have been in the U.S for 6 years, visiting the UK for no more than 30 days a year.

If we move back to the UK now and sell the house in the U.S, I believe I would qualify for split tax year treatment back in the UK so my severance would not be taxable in the UK? however the house sale would go through after we get back to the UK. Given this was our main home throughout, would this be subject to capital gains in the UK?

Also, pros and cons of keeping the Green Cards? The tax treaty would mean I would be unlikely to pay any U.S taxes but would still file each year?

Anything else we should factor in?

All comments very much appreciated.
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Old Jun 28th 2023, 11:35 pm
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Default Re: Moving back to UK - income and capital gains tax

I am saddened to hear about your situation.

You will immediately lose your U.S. PR status if you take up residency outside the country.

I take your kids are not U.S. citizens and so once your PR status is gone there will be no backdoor.

How many years till you qualify for U.S. citizenship?
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Old Jun 28th 2023, 11:42 pm
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Default Re: Moving back to UK - income and capital gains tax

Originally Posted by destone
I am saddened to hear about your situation.

You will immediately lose your U.S. PR status if you take up residency outside the country.

I take your kids are not U.S. citizens and so once your PR status is gone there will be no backdoor.

How many years till you qualify for U.S. citizenship?
I thought if you applied for a re-entry permit, you would still be recognized as a US PR for 2 years.

The OP has stated his children are PRs…therefore they cannot be USCs.
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Old Jun 28th 2023, 11:57 pm
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Default Re: Moving back to UK - income and capital gains tax

Thanks both,

The kids are 12 and 11, if we do leave, it’s unlikely we will return, certainly not before they both finish school. Still 2 years out from being able to apply for citizenship.
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Old Jun 29th 2023, 12:13 am
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Default Re: Moving back to UK - income and capital gains tax

Originally Posted by Superdarts
Thanks both,

The kids are 12 and 11, if we do leave, it’s unlikely we will return, certainly not before they both finish school. Still 2 years out from being able to apply for citizenship.
Never, say never.

”Show you have been physically present in the United States for at least 30 months out of the five years immediately before the date you file Form N-400”

https://www.uscis.gov/citizenship/le...g%20Calculator.





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Old Jun 29th 2023, 7:48 am
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Default Re: Moving back to UK - income and capital gains tax

Originally Posted by Superdarts
Hi All,

I lost my job at the end of Feb and we are now considering moving back to the UK after a fruitless job search thus far in the U.S. Situation as follows:
  • Here with my wife and 2 children all on Green Card
  • Employment ended 23rd Feb 2023
  • Severance package received end March and end May 2023
  • We have owned a property here in the U.S for 3 years - this has been our main residence. We have property in the Uk which has been rented out throughout.
  • We have been in the U.S for 6 years, visiting the UK for no more than 30 days a year.

If we move back to the UK now and sell the house in the U.S, I believe I would qualify for split tax year treatment back in the UK so my severance would not be taxable in the UK? however the house sale would go through after we get back to the UK. Given this was our main home throughout, would this be subject to capital gains in the UK?

Also, pros and cons of keeping the Green Cards? The tax treaty would mean I would be unlikely to pay any U.S taxes but would still file each year?

Anything else we should factor in?

All comments very much appreciated.
Sorry to hear that this didn’t work out for you all.

pretty sure that your house sale won’t attract capital gains in the UK as it is your main home. Our daughter has just been through the same process, selling her house in the USA and moving back, but with the sale not completing before her move back. She has since bought a house here. You won’t be taxed by the UK on your severance since it is income from before you return. Personally I wouldn’t hold onto the green cards as you will be considered a “US person” which can have some poor outcomes tax-wise once you are resident in the UK and filing US taxes from the UK is a real pain.

If you have a 401k or similar I would roll it over into an IRA with a brokerage such as Fidelity or Vanguard that supports overseas customers. This is a non-taxable event. Similarly look at your other US banks and accounts to see what it takes to access them from overseas which you may need to do at least for a year or so, such as when you file a US tax return.
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Old Jun 29th 2023, 12:54 pm
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Default Re: Moving back to UK - income and capital gains tax

Originally Posted by destone
I am saddened to hear about your situation.

You will immediately lose your U.S. PR status if you take up residency outside the country.

I take your kids are not U.S. citizens and so once your PR status is gone there will be no backdoor.

How many years till you qualify for U.S. citizenship?
I don’t think this is how it works in theory or in practice… the OP can either file the paperwork to give PR up or he can be sent to an immigration judge when re-entering the US and have it taken…. Either way it is the US criteria that matter not if you meet a residency requirement somewhere else, you could meet the criteria in more than one country…
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Old Jun 29th 2023, 5:58 pm
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Default Re: Moving back to UK - income and capital gains tax

Originally Posted by tht
I don’t think this is how it works in theory or in practice… the OP can either file the paperwork to give PR up or he can be sent to an immigration judge when re-entering the US and have it taken…. Either way it is the US criteria that matter not if you meet a residency requirement somewhere else, you could meet the criteria in more than one country…
“Abandonment of LPR status occurs when the LPR demonstrates his or her intent to no longer reside in the United States as an LPR after departing the United States.” as per USCIS.
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Old Jun 29th 2023, 6:06 pm
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Default Re: Moving back to UK - income and capital gains tax

Originally Posted by destone
“Abandonment of LPR status occurs when the LPR demonstrates his or her intent to no longer reside in the United States as an LPR after departing the United States.” as per USCIS.
please take a look at the link in my post #5.
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Old Jun 29th 2023, 6:12 pm
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Default Re: Moving back to UK - income and capital gains tax

Originally Posted by Jerseygirl
I thought if you applied for a re-entry permit, you would still be recognized as a US PR for 2 years.

The OP has stated his children are PRs…therefore they cannot be USCs.
These two comments from USCIS policy give me worries re: I-131.

”WARNING: The document does not entitle you to be paroled into the United States; a separate discretionary decision on a request for parole will be made when you arrive at a port-of-entry upon your return.”, and;

“With the exception of having to obtain a returning resident visa abroad, a Reentry Permit does not exempt you from compliance with any of the requirements of U.S. immigration laws. If you are in possession of a valid, unexpired Reentry Permit, you will not be deemed to have abandoned your status as a lawful permanent resident or conditional permanent resident based solely on the duration of your absences from the United States while the permit is valid.”
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Old Jun 29th 2023, 6:54 pm
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Default Re: Moving back to UK - income and capital gains tax

Originally Posted by destone
I am saddened to hear about your situation.

You will immediately lose your U.S. PR status if you take up residency outside the country.

I take your kids are not U.S. citizens and so once your PR status is gone there will be no backdoor.

How many years till you qualify for U.S. citizenship?
Originally Posted by destone
“Abandonment of LPR status occurs when the LPR demonstrates his or her intent to no longer reside in the United States as an LPR after departing the United States.” as per USCIS.
So you are now saying different things….

What the OP does could impact the perception of intent… like if they are actively seeking employment here… but are in the UK temporarily… right now it sounds like they are looking at options… even the N400 only needs you to be physically present in the US for 50% + 1 day etc… and you can easily trigger “tax residence” somewhere like the UK if you were to spend 50% - 1 day there… and because it’s a 5 year period if you already have 3 years of near 100% time here the 50% average would be doable even with longer trips abroad (as long as you don’t exceed 6 months). Now there are other things that you could do (selling a house) / not do (file your US tax returns as a resident) that could be used as an indicator of intent… but I don’t think that another country also viewing you as a tax resident under their rules is conclusive proof of intent… something like job redundancy that is out of your own control is the opposite of someone’s intent in my opinion…
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Old Jun 29th 2023, 7:26 pm
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Default Re: Moving back to UK - income and capital gains tax

If you keep your green card you will be very restricted in what you can invest in, specifically you will have to avoid all UK mutual funds. You will have to report all of your UK accounts (and any other non U.S. accounts) if you meet the FBAR and FATCA thresholds. If you are unlikely to be coming back, or meet the requirements to retain the green card long term, then I would get rid of it ASAP. There is little benefit to keeping it and a lot of hassle in retaining it.

However, if you like it here, and want to stay, I don’t know that I would give up finding other employment too quickly. It’s only been a few months, and if you have a green card and are willing to move I would think you should find something eventually even if it is not ideal to begin with.
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Old Jun 29th 2023, 11:20 pm
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Default Re: Moving back to UK - income and capital gains tax

Originally Posted by tht
So you are now saying different things….

What the OP does could impact the perception of intent… like if they are actively seeking employment here… but are in the UK temporarily… right now it sounds like they are looking at options… even the N400 only needs you to be physically present in the US for 50% + 1 day etc… and you can easily trigger “tax residence” somewhere like the UK if you were to spend 50% - 1 day there… and because it’s a 5 year period if you already have 3 years of near 100% time here the 50% average would be doable even with longer trips abroad (as long as you don’t exceed 6 months). Now there are other things that you could do (selling a house) / not do (file your US tax returns as a resident) that could be used as an indicator of intent… but I don’t think that another country also viewing you as a tax resident under their rules is conclusive proof of intent… something like job redundancy that is out of your own control is the opposite of someone’s intent in my opinion…
I would imagine that selling your U.S. property and moving into your UK property may qualify as an intent to abandon U.S. residency. The burden of proof is on the OP to demonstrate such move is temporary only in nature.
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Old Jul 3rd 2023, 6:03 pm
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Default Re: Moving back to UK - income and capital gains tax

Originally Posted by destone
I am saddened to hear about your situation.

You will immediately lose your U.S. PR status if you take up residency outside the country. ....
That is the harshest theoretical interpretation of the PR rules. It would take 6 months of absence from the US before US immigration may show any interest, but the rights/ status of PR cannot be determined by US immigration and US immigration has no powers to either (i) deny a PR access to the US, nor (ii) compel anyone to sign a document giving up PR status as a condition to entering the US, or otherwise. Only an immigration court can strip somone of PR status, and anyone who has PR status that has not been voluntarily reqlinquished, has a right to a hearing in immigration court. So it can, under some circumstances, be years before PR status is lost, even if your green card has expired in the meantime. Anyone in such a situation should obtain counsel from a lawyer with actual experience in trying abandonment cases.
Originally Posted by destone
I would imagine that selling your U.S. property and moving into your UK property may qualify as an intent to abandon U.S. residency. ....
I imagine that you're not a judge in an immigration court.

Selling your home in the US is only one of many factors that could be relevant in a judge determing whether PR status has been abandoned.

Last edited by Pulaski; Jul 3rd 2023 at 6:06 pm.
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