CGT liability of UK resident on Irish share sale

Q&A: Dominic Coyle

UK residents are able to make a gain of £11,300 (just over €12,500) – before CGT kicks in. Photograph: Dan Kitwood/Getty Images

UK residents are able to make a gain of £11,300 (just over €12,500) – before CGT kicks in. Photograph: Dan Kitwood/Getty Images

 

I am an Irish citizen, but I have lived in London for the past 11 years. I recently sold shares in a company that is quoted on the Irish Stock Exchange.

My understanding is that I would usually have to pay the capital gains tax in the country where I am resident. However, the profit I made would be exempt from UK capital gains tax as it is under the tax-free allowance rate in the UK. But it exceeds the tax-free allowance rate in Ireland. In this situation I am meant to pay the tax in Ireland?

Mr T.N., London

You find yourself in the fortunate position of having made gains that are below the higher threshold applying for capital gains tax in the UK. While people resident in Ireland can, in general, only make a gain of €1,270 before facing a bill for capital gains tax at 23 per cent, UK residents are able to make a gain this year nearly 10 times that – £11,300 (just over €12,500) – before CGT kicks in.

And even then, the rate of tax payable is lower than here – 18 or 28 per cent, depending on your income.

All of which is a bit academic for you, as you have no liability to UK capital gains.

The good news is that, just because the assets are Irish, you’re not liable to gains here either. The key here is not your citizenship but your tax residence. Having been in Britain for the past 11 years, you are definitely tax resident there and not in Ireland.

In the same way that an Irish resident is liable for tax on the sale of shares they hold – regardless of whether those shares are in Irish, English, US or other markets – as a UK tax resident, any capital gains tax liability you would have in this situation would be to the English authorities.

Given that Her Majesty’s Revenue and Customs is happy that you have no liability, you are free to enjoy your windfall without worrying about the prospect of a tap on the shoulder from the Irish tax authorities.

Send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.

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