Revenue closes capital gains tax loophole

The Inland Revenue has moved to close a loophole that allowed some wealthy investors to take up ‘temporary non-resident’ status in certain European countries, thereby avoiding paying capital gains tax in Britain.

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Bilateral treaties with Belgium, Portugal and Austria have enabled British nationals living in those countries to claim non-resident status just one year after leaving the UK, thereby avoiding paying capital gains tax here.

Expats have to spend at least five years abroad before qualifying for this status under agreements with most other countries.

Closing the loophole – part of Gordon Brown’s tax avoidance measures in the latest finance bill – could boost the Revenue’s coffers by up to £100m, according to The Observer.

‘It’s a very clear signal that if you make a capital gain in this country, you’re going to have to pay tax on it,’ said John Whiting, a tax partner at PricewaterhouseCoopers, in the paper over the weekend.

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