Does moving to Scotland from England affect capital gains tax?

Q I have a problem about what to do with a property in the South East of England, which I bought for £190,000 at the end of 2014. Almost everything the money for the purchase was provided by my father – who died in July 2020 – as a gift. Even though he died less than seven years after giving me the money, there was no inheritance tax to pay as his estate (including the gift) was valued at less than the zero rate bracket £325,000.

I am in the process of moving to Scotland, with a view once settled to buying another property (this time with my partner) without selling my existing property. My plan for some time has been to rent out my current home - due to the disparity in property values ​​this should cover all the mortgage payments on a new property and allow me to keep the English property as a retirement nest egg to sell 20 to 25 years on the line. I am aware that I would be liable for capital gains tax (CGT) at this time, although I believe I may be eligible for relief for the years I have lived in the house.

I was recently told by family members that I shouldn't pursue this option. Instead, I should be looking to sell the house in England now and take out the tax gain, avoiding a tax bill down the line. They then suggested using some of the money to buy another cheaper property and using it as an asset for future income. When I pointed out that any increase in the value of this property would also make me liable for CGT, they seemed to think that my current property's status as being purchased with cash received as a gift would leave me liable for a much higher bill, and also warned that I might be affected by something unforeseen in the differences between English and Scottish law. They say a clean break now would alleviate these potential issues.

I'm having trouble finding advice for my exact situation. I can find general advice for each facet individually but nothing that brings CGT together on let properties, properties bought with gifts and the potential effects between English and Scottish law. I think there are a lot of worries for nothing but you have to ask yourself the question to defuse family disputes. Can you help me?RM

A Your family members obviously haven't googled "CGT Scotland"; otherwise they would know that the rules for calculating capital gains tax – as well as inheritance tax – are the same across the UK. Taxes that are different in Scotland are Scottish Income Tax and Land and Buildings Transactions Tax (LBTT) which replaced the Stamp Duty Land Tax in Scotland from 1 April 2015. They would also know that CGT in Scotland is calculated on UK thresholds rather than Scottish income tax brackets, which means that if you are a higher rate taxpayer under the Scottish system you still pay the basic rate CGT rate of 18%, unlike higher rate taxpayers living in the rest of the UK, who pay the higher rate of 28%.

God only knows what your family members Googled to make up the fiction that says CGT is affected by how a property purchase is financed. The source of the money you used to buy your current home has no bearing on the eventual gain, and therefore on the CGT bill. The gain (or loss) is calculated as the sale price less the purchase price less miscellaneous expenses, whether you received the money, took out a mortgage, or used the money you stuffed under the mattress. I have absolutely no idea why differences between English and Scottish law would affect your potential CGT bill, but perhaps your family members would like to share how they work.

I agree with your family that selling your current property and buying a rental in Scotland would be a better option, but not for the reasons they give. It just seems more convenient because managing a rental property across the country can be a little stressful unless you've paid a rental agent to do it for you.

What really baffles me is why you let your family interfere in your and your partner's personal finances. I suspect it might have something to do with the money your dad gave you, but that was his business, not theirs, and certainly not mine.