As long-term expats must we pay capital gains on our UK flat?

Q I am a UK citizen but have lived in California for the past 12 years since I remarried. My husband has dual US and UK nationality. Prior to moving to America I lived in my London flat for four years, which I still own and have since rented out. Upon my husband's retirement early next year we plan to move back to the UK and live in the flat, which will be our main residence. However, we hope to move to the north of England to be closer to family as soon as conveniently possible. How long would we have to live in the flat before we can sell it and buy something further north without incurring capital gains tax (CGT)? The flat is in my sole (previous) name, but we would buy something in joint names. What is the current rate of CGT? Since June I have been receiving a pension. I am 60 years old, and my husband is 67. Our pensions will be our only form of income. BB A To answer your last question first, the current rate of CGT is 18%. Individuals subject to UK tax can each make £10,100 of gains (in the 2009-10 tax year) which are exempt from tax. But given that you have been outside the UK for 12 years you may not be liable for UK tax until you return permanently when your husband retires. For this reason, it would be worth investigating whether you would be exempt from UK CGT by selling your flat before making your return. A full explanation of the tax rules – Help Sheet 278: Temporary non-residents and capital gains tax – is available from HM Revenue & Customs. But bear in mind there might still be US taxes to pay. Finally, moving back into the flat does not make you exempt from CGT for the period you rented it out. But it does mean you can split the gain you make when you sell according to the time the flat was let and the time it was your main home. So part of the gain could potentially be exempt from tax.