1 week ago
Harry and Meghan’s UK Return Brings Tax Gains and Losses
Harry and Meghan may move back to the UK after living in America for six years.
Their children may start school there in September.
Being away for more than five years could help them avoid some UK tax on certain profits from assets sold while they were abroad.
This rule is meant to stop people from leaving briefly to sell things and avoid tax.
However, they did not stay away for the 10 years needed for a different tax benefit.
That benefit could have protected some foreign income and investment gains for four years after returning.
The couple may therefore save money under one rule but lose a larger opportunity under another.
Meghan will still have US tax responsibilities because she is American.
Harry and Meghan are reportedly returning to the UK after six years living in the United States.
Their children, Prince Archie and Princess Lilibet, are reportedly expected to attend British schools from September.
Experts say spending more than five years abroad could keep some qualifying asset-sale gains outside UK Capital Gains Tax rules.
Returning after six years means Harry may miss four years of Foreign Income and Gains relief, which requires 10 consecutive years of non-UK residence.
Meghan is expected to retain US tax obligations because she is an American citizen, while the couple’s fortune is estimated at about $60 million.
- Who
- Prince Harry, Meghan Markle, Prince Archie and Princess Lilibet.
- What
- Harry and Meghan are reportedly planning an extended return to the UK, creating potential UK and US tax consequences.
- Where
- They are reportedly moving from California to a private, non-royal residence outside London.
- When
- They moved to the United States in 2020 and are reportedly returning after six years; reports differ on whether the move is later this month or in 2026, with the children expected to start school in September.
- Why
- Their six-year absence may place some asset sales beyond the UK’s temporary non-residence Capital Gains Tax rules, but it is shorter than the 10 years required for the newer Foreign Income and Gains regime.
Potential Tax Savings
Missed Relief and Ongoing Liabilities
Capital Gains Tax
Potential Tax Savings
Tax experts say six full years outside the UK could mean certain gains from qualifying assets sold while the couple was non-resident are not taxed in the UK when they return.
Missed Relief and Ongoing Liabilities
The articles describe this as a potential treatment subject to applicable rules, rather than a confirmed ruling covering all assets or sales.
Foreign Income and Gains relief
Potential Tax Savings
Returning after six years may still leave the couple beyond the five-year temporary non-residence period, potentially protecting qualifying foreign disposals and income generated during their absence.
Missed Relief and Ongoing Liabilities
Harry may miss the newer four-year Foreign Income and Gains relief because the cited requirement is 10 consecutive years outside the UK; qualifying foreign income and investment gains could therefore face UK tax after return.
Long-term wealth planning
Potential Tax Savings
Remaining outside the UK for 10 years could potentially have produced additional advantages, including keeping some non-UK assets outside inheritance-tax scope for a period after return.
Missed Relief and Ongoing Liabilities
Returning after six years may forfeit those potential advantages, while UK inheritance tax can reach 40% and Meghan is expected to retain US tax obligations.
Key facts
- Estimated combined fortune
- About $60 million
- Time outside the UK
- Six years, after moving to California in 2020
- Temporary non-residence rule
- It can potentially tax certain gains when someone leaves the UK for fewer than five years and returns.
- Foreign Income and Gains regime
- The cited experts say it requires 10 consecutive years of non-UK residence and can provide four years of relief after return.
- UK inheritance tax rate
- Inheritance tax can reach 40%, according to the article.
- Reported children’s schooling
- Prince Archie and Princess Lilibet are expected to attend British schools from September.
- Meghan’s US tax position
- She is expected to continue having US tax obligations because she was born in California.
Quotes
Nouran Moustafa
Financial adviser at Roxton Wealth
“Six years away is not enough to qualify for the new four-year foreign income and gains regime, which requires 10 consecutive years of non-UK residence.”
wionews.com
“Harry and Meghan's six-year stay in America could prove important for Capital Gains Tax.”
wionews.com
Dhana Sabanathan
Partner in the tax, trusts and succession team at law firm Michelmores
“Whilst their return is welcome news, staying away a bit longer would have given them a much better tax result”
livemint.com
Sources
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