Returning to Britain: keeping your tax bill down Contrary to popular opinion, returning expats do not pay any UK tax on wealth accumulated while they were away, irrespective of whether money is remitted to the UK or not. Tax will have, presumably, been paid on the £250,000 in savings. They were not UK resident when that money was accumulated so they should not be required to pay UK tax on it. Once they have returned to the UK, they will be subject to UK tax on their worldwide income and capital gains, but there are a number of planning opportunities. They own a South African property. Any gain in value since they acquired the property would be subject to capital gains tax (CGT) in South Africa, whether they sell it now or later. The gain will be taxed in South Africa at a maximum of 13pc. As the property is their primary residence, the first R2m (£147,000) gain won't be taxable, so it would seem unlikely that much, if any, tax would be payable. If they wait until they return to the UK before selling, they would be subject to CGT on that same gain at the UK rate of 28pc (with a credit for tax paid in South Africa). So the couple should ensure they sell the property before they become UK resident. They also have an investment property in the UK. Non-UK residents do not pay CGT on resale of UK property, so if they sell the property before they return to the UK there would be no UK CGT. Unfortunately, South Africa levies CGT on worldwide gains, so the same sale would suffer CGT in South Africa. They could avoid both the South African and UK tax if they were able to time the sale so that they had exited South Africa for tax purposes but not yet arrived in the UK. That would not be easy to achieve but it might be possible. If they moved into the house, they could avoid some of the UK CGT by claiming Principal Private Residence (PPR) relief. Once they return to the UK, the return on their savings and investments would be fully taxable in the UK. They could defer those taxes by wrapping the investments in an insurance contract. These types of structures are sold by independent financial advisers and known as bonds or executive bonds. The money is used to purchase a life insurance contract and the premium is invested in a range of funds. There would be no point in using a structure of this type if the investment income was required for general living expenses. Insurance policies/ wrappers are beneficial only if the couple can afford to let it roll up tax-free within the bond or insurance contract. Another option would be to transfer the money into a qualifying non-UK pension scheme (QNUPS). This is an offshore pension that is most useful where a UK tax deduction on the money going in is not required. The pension can invest the money tax-free and there is the added advantage that the pension is outside UK inheritance tax. They could also consider transferring their South African pension to a qualifying registered offshore pension scheme (QROPS). This would give them flexibility going forward and the potential to transfer any UK pension to the same QROPS should they leave the UK again. An actuary would need to advise whether this was advantageous. Howard Bilton is chairman of the Sovereign Group and a barrister-at-law.