ACCA Advanced Taxation (ATX) Practice Exam

What does it mean for someone to be a temporary non-UK resident for CGT purposes?

1. They have never lived in the UK

2. They were UK residents for at least 4 of the last 7 tax years

3. They are permanently residing outside the UK

4. They have lived abroad for a minimum of five years

The correct answer is: They were UK residents for at least 4 of the last 7 tax years

A temporary non-UK resident for Capital Gains Tax (CGT) purposes refers to individuals who previously had a residence in the UK but have since moved abroad and may still be subject to certain tax rules based on their residency history. Specifically, having been a UK resident for at least four out of the last seven tax years indicates that the individual has established a significant connection to the UK, which can influence how their capital gains are taxed when they cease to be a UK resident. When a person meets this criterion, it implies they are transitioning from being a resident to a non-resident status, potentially impacting their liability for CGT on gains made while they were a resident. The concept assumes that these individuals have established important ties to the UK that can have lasting implications for their tax status, thus making their temporary non-resident status relevant for CGT considerations. The other options do not directly capture the definition of temporary non-UK residency for CGT purposes, as they either refer to individuals who have never lived in the UK, those permanently residing outside the UK, or those who have been living abroad for a specific duration without reference to their previous residency status and its impact on CGT.