UK CGT: When Going Home to Sell Works

Over the past few weeks I have been helping a client work through the UK temporary non-residency rules. The person had significant assets back home, and was aware that as a UK tax resident, those assets would be taxed under UK capital gains tax (CGT) rules if they were ever sold. They did not qualify for the FIG regime, so could they move back to NZ, sell all the assets (NZ has pretty much no capital gains tax), and then return to the UK to live without paying any UK CGT? In this case the answer was yes - but it needs to be well planned out.

So let's get into the detail.

Here's a worked example to show you what this looks like in practice. Mark is a Kiwi software developer in his early fifties who moved to London a couple of years ago, fell for the place, and is now thinking about sticking around long-term. There's just one problem. Back home in Auckland, he's got a rental property he bought in 2008, a chunk of money in a couple of Milford funds, and a healthy KiwiSaver-style super balance that's been quietly compounding away for two decades.

If he sells any of it now that he's a UK tax resident, HMRC takes a slice. And not a small one.

The numbers add up quickly. His Auckland property has roughly doubled in value. The Milford funds have done well. The super fund alone could trigger a UK income tax bill running into the tens of thousands, because the gains on non-reporting funds get taxed at marginal rates rather than the lower capital gains rates. Add in a property gain on top, and Mark is looking at a UK tax bill that could comfortably clear six figures.

But Mark's situation isn't fixed. There's a window in the UK tax rules that lets people in his position go home, sell what they need to sell, and come back to the UK with no UK tax bill on the gains - provided they get the timing right and don't fall into the temporary non-residence trap.

This piece is for Kiwis and Aussies who are UK tax resident, hold appreciated assets back home, and have the flexibility to spend a tax year somewhere other than the UK. We'll walk through how the strategy works, why the timing matters so much, who it works for and who it doesn't, and the practical mechanics of getting it right.

We won't cover the New Zealand or Australian tax treatment of any sale in detail - that's a job for an adviser in your home country - but the broad picture is friendly. New Zealand has no general capital gains tax (though watch out for the bright-line test on residential property), and Australia's exit tax rules need their own careful planning if you're heading back there. We'll flag the key pressure points but stop short of giving home-country advice.

If you're thinking about a long stay in the UK and you've got assets back home that have done well, this is worth ten minutes of your time.

The core idea: why a year away changes everything

UK tax residence is the starting point for whether your foreign gains fall within the UK tax net. As a general rule, if you sell foreign assets while you're UK tax resident, HMRC has a claim on the gain. If you sell while you're genuinely non-UK resident, those gains usually fall outside UK CGT entirely.

For someone who moved to the UK with a nice portfolio of assets back home, that creates a legitimate planning window. If you can step outside the UK tax net for long enough to sell those assets, the gains may never become taxable in the UK at all. You don't get a discount, you don't get a deferral - the UK tax simply may not apply.

That said, this isn't a "go home for a few months and sell everything" trick. The planning depends on two things working together.

First, in the cleanest version of the planning, you are non-UK resident for an entire UK tax year. Not a calendar year. Not "about twelve months". The UK tax year runs from 6 April to 5 April, and you need to fall outside UK residence for one of those clean blocks. As an example, leaving the UK on 1 November 2026 and returning on 1 December 2027 may feel like being away for more than a year, but unless the Statutory Residence Test gives you non-resident status for a complete UK tax year, the planning may not work. Time the departure properly, and the year is yours.

Second, you need to actually realise the gains while you're out. That sounds obvious but it matters. The trigger for UK CGT is the disposal - the sale, surrender, redemption or withdrawal, depending on the asset. Holding the assets while you're abroad doesn't help. They have to be sold during the non-resident window for the gains to fall outside the UK net.

One technical point to flag here is split-year treatment. In some cases, the year you leave the UK, or the year you return, can be split into a UK part and an overseas part. That can sometimes mean you do not need to be away for a neat 6 April to 5 April tax year for every part of the planning to work. But split-year treatment has its own conditions and traps, and it interacts with the temporary non-residence rules in ways that need careful handling. For this article, I'm focusing on the cleaner version: one complete non-resident UK tax year, with disposals made during that year. If split-year treatment is on the table for your situation, then there is a deeper conversation to have.

Get the two main points right and the result can be genuinely powerful. Property gains, fund redemptions, share sales - much of it may fall outside UK CGT, provided the disposals happen during the non-resident year and you're outside the temporary non-residence rules.

There are two big caveats though, and they're what the rest of this piece is really about.

The first is the temporary non-residence rule. HMRC has long had a backstop for people who leave the UK, sell things, and pop back. We'll get to it shortly, but the short version is: if you've already been UK resident for long enough before you leave, and you return within five years, HMRC can pull certain gains and income back into UK tax in the year you return. The strategy still works for plenty of people, but you need to know whether you're inside or outside that backstop before you book any flights.

The second is getting the residency mechanics right. Becoming non-UK resident isn't a paperwork exercise - it's a factual test under the Statutory Residence Test, with conditions around how many days you spend in the UK, where your homes are, and whether your circumstances qualify for any special treatment on the way out or back in. The next few sections walk through how to get all of that right.

When FIG does not help

If you've been reading our older blogs, you'll have come across the new Foreign Income and Gains regime, or FIG, which replaced the old non-dom rules from 6 April 2025.

FIG is generally available to new arrivals in the UK, and for many it's a useful four-year regime that keeps certain foreign income and gains outside UK tax. To qualify, you need to have been non-UK resident for the ten consecutive UK tax years before your arrival. If you were UK tax resident in any tax year within that ten-year window - even briefly, even years ago - FIG is off the table.

That's the situation Mark is in. For most new arrivals to the UK with foreign assets held offshore, FIG would be the first port of call, but because Mark does not qualify for FIG, he needs to look at other options.

The temporary non-residence trap

If there's one rule that decides whether this strategy works for you or not, it's the temporary non-residence rule. So it's worth slowing down and getting this one right.

The rule exists because HMRC saw the planning angle a long time ago. Without a backstop, anyone with appreciated assets could simply leave the UK for a tax year, sell everything, and pop back. The temporary non-residence rule is the backstop. It catches certain gains and income realised during a short period of non-residence and pulls them back into UK tax in the year you return.

The rule has two main triggers, and both have to apply for it to bite.

The first is the four-of-seven test. The rule only applies to people who were UK tax resident for at least four of the seven UK tax years immediately before they leave (the four year count generally excludes the year of departure). If you have been UK resident for fewer than four of the seven tax years before your departure year, the temporary non-residence rules should not normally apply. That can make the planning much more flexible, but you still need to get the Statutory Residence Test, departure date, disposal date and asset type right.

The second trigger is the five-year test. The rule only catches gains where the period of non-residence is five years or less. Stay outside the UK for long enough, broadly more than five years, and the temporary non-residence rules should generally fall away.

Put those together, and the rule catches a fairly specific group: people who've been in the UK long enough to be considered properly settled (four-plus years out of the last seven), who then leave, sell things while away, and come back within five years. If that's you, the gains realised while you were out get added back to your UK tax return in the year you return - taxed as if you'd never left.

For a recent arrival like Mark, the four-of-seven test is the key one. He arrived in the UK in late 2024 and became UK tax resident from the 2025/26 tax year. If he leaves at the end of the 2027/28 tax year, he'll have been UK resident for two full tax years - 2025/26 and 2026/27 - and possibly part of 2027/28 depending on how the departure year plays out. Either way, he's nowhere near four. The temporary non-residence rule doesn't apply to him.

This is the section where most people will find their answer. If you've been UK tax resident for fewer than four of the last seven tax years, the strategy is genuinely on the table for you. If you've been UK resident for four or more of those seven, it gets much harder, and you're really looking at whether you can stay out for more than five years - which is a different conversation entirely.

Departure timing: when to leave and when to sell

If the temporary non-residence rule doesn't catch you, the next thing to get right is the timing of two specific dates: when you leave the UK, and when you actually sell your assets.

Start with the departure. The cleanest approach is to leave the UK shortly before the end of a UK tax year - so on or before 5 April. That way, the new tax year starts on 6 April with you firmly outside the UK, and the whole tax year ahead of you is a non-resident year. Leave the UK in October and you're still in the same UK tax year you started in, which means you can't use that year for the planning at all. Time it to the end of a UK tax year and you've immediately got a clean non-resident year ahead.

Now the sale itself. Even once you're physically out of the UK, hold off on the actual disposals until after 6 April rather than rushing them in late March of the departure year. The reason is belts and braces. HMRC's guidance is clear that CGT applies to gains arising while you're UK tax resident. If you sell on, say, 28 March - while still in the departure tax year - you give HMRC scope to argue the gain arose during the UK part of that year. Sell on or after 6 April, in the new tax year where you're non-resident from day one, and that argument disappears.

So the choreography looks like this: leave the UK just before 5 April, then wait until the new tax year starts on 6 April before triggering any disposals. A few weeks of patience at the start of the non-resident year is cheap insurance for what could be a six-figure tax outcome.

The third timing question is when you can come back. The strategy itself requires you to be non-UK resident for a complete UK tax year - that's the minimum. So even if the temporary non-residence rule doesn't apply to you, you can't come back partway through that non-resident year and expect the planning to hold. The clock only starts ticking on a possible return once you've been outside the UK for a full 6 April to 5 April block. Once that's done, if the temporary non-residence rule doesn't apply to you, you can return whenever your life allows.

For someone like Mark, that third question is the simpler one. He leaves at the end of the 2027/28 tax year, stays outside the UK for the whole of 2028/29, sells his assets during that year, and can then return to the UK from 6 April 2029 onwards.

What about specific assets?

The strategy works in broadly the same way across most asset classes, but the size of the prize varies. Here's a quick run through the main asset types Kiwis and Aussies typically hold back home, so you can sense-check whether you're sitting on something this applies to.

Property

A New Zealand or Australian property sold while you're UK tax resident is taxed by the UK on the gain over your full period of ownership. Private Residence Relief may help if it's been your main home, but rentals usually take a hit.

Non-reporting offshore funds (eg Investment funds, NZ PIE funds)

Often the biggest win. Gains on these funds are taxed in the UK as income at your marginal rate, not at the lower CGT rates, and NZ tax paid inside a PIE may not be creditable. Sold during a non-resident UK tax year, the whole problem disappears.

Term deposits and savings interest

Less of a CGT play - it's the interest that's taxed, not capital. Worth knowing that interest on multi-year compounding deposits hits the UK return in the year the deposit matures, so a maturity date falling inside a non-resident year can be useful.

Pension funds / Super

Withdrawals or drawdowns from overseas pension or superannuation-style schemes can be a major planning point, but this is one of the most fact-specific areas. For most of the clients this can be a big tax planning win.

Shares and listed investments

Standard CGT territory. Saving is real but more marginal than property or non-reporting funds, particularly for smaller portfolios.

If you've got significant value in property, non-reporting funds, or NZ super, this strategy is likely worth a serious look. Term deposits and small share portfolios on their own are unlikely to justify the upheaval.

When this strategy won't work

The planning is genuinely powerful for the right person, but it's not for everyone. A quick honest section on where it breaks down.

You've already been UK resident for four or more of the last seven tax years. This is the big one. Once the four-of-seven test is met, the temporary non-residence rule applies, and you'd need to stay outside the UK for more than five years to avoid the gains being pulled back in. For most people, leaving the UK for five-plus years is a life decision, not a tax decision. If you're in this group, the strategy isn't really on the table - the alternatives below are more relevant.

Your life or work won't accommodate a year overseas. In the cleanest version of the planning, a complete UK tax year out of the country is the minimum. If you've got a job that won't let you go, school-age children settled in the UK, or a partner whose career is anchored here, the practical cost of a year away can outweigh the tax saving. The strategy works best for people with genuine flexibility - retirees, semi-retirees, the self-employed, people between jobs, or those who can work remotely from home for a year.

The assets are UK-situated. This article is about foreign assets - property and investments held back home. UK property and certain UK investments stay within UK tax even when you're non-resident, so the strategy doesn't help with those. If your appreciated assets are mostly UK-based, this isn't your tool.

If any of these rule you out, the alternatives are more modest but still useful. Drip-feeding modest withdrawals while UK income is below the personal allowance can shelter small amounts year by year. Using the UK's annual CGT exemption (£3,000 in 2025/26) across multiple tax years can chip away at a portfolio. Pension drawdowns can be timed and structured to manage the marginal rate. None of these is a substitute for the headline strategy - but for someone who can't take a year out, they're at least worth getting advice on.

Closing thoughts and next steps

The strategy in this article is real, the savings can be substantial, and for the right person it's one of the cleanest pieces of cross-border tax planning available. But it's also fragile. Wrong departure date, wrong sale date, wrong return date - any one of them can turn a six-figure saving into a six-figure mistake.

The core message is simple. If you're a recent arrival to the UK with appreciated assets back home, you've been UK tax resident for fewer than four of the last seven tax years, and FIG does not help, you have a genuine planning window. A complete UK tax year as non-resident, with the disposals carefully timed inside it, can take property gains, fund redemptions, and super withdrawals outside UK tax altogether. The home-country treatment is generally friendly for Kiwis - and workable for Aussies with the right local advice.

The catch is that the planning needs to happen well before the departure, not after. By the time you've already left, half the levers are gone. The earlier the conversation starts, the more options stay open.

If any of this resonates with your situation, this is exactly the sort of work we do day to day at No Worries. Cross-border tax planning, UK self assessment for Kiwis and Aussies - that's our patch. We can sense-check the UK side, model the UK tax exposure, map out the timing, and work alongside your New Zealand or Australian adviser so the home-country treatment is not missed. If you'd like to talk it through, get in touch and we'll set up a call.