The throng on the platform was thinning, the remaining few passengers running to get on board. A whistle blew, doors slammed and then the train gave a tiny judder, before pulling slowly out of Paddington station. A man threw himself into the seat opposite Alex, panting.
Alex placed an elbow on the table in front of him and looked out at the view of a darkening London skyline. Lights twinkled as the train slid past a row of tall Victorian houses, their brick backs facing the tracks, giving passengers a view into rooms yet to have their curtains drawn. The train rattled past Acton, gathering speed as it rumbled through the London suburbs. By the time he reached the outskirts of Reading, Alex had moved on from questioning the reason his parents hadn’t told him and was asking ‘Why do it at all?’ People became tax exiles to shelter large tax bills, but his father wasn’t earning those gigantic sums anymore. In fact, his mother’s reluctance to sub his income, coupled with his father’s snide comments each time his dadpicked up a restaurant bill, implied his parents were short of money.Whywere they tax exiles?
The train pulled into Tiverton Parkway. Jess met him and drove him to Barnstaple. The next day – with the sun rising over fields of sheep their heads down contentedly munching grass – they drove to Croyde Bay, past the house his family used to own. Alex looked wistfully at it, nestled into the hillside. He could only see the roof but could imagine standing on the wooden terrace – which stretched the width of the house and faced out to sea – wrapped in a dressing gown, the onshore breeze rustling his hair.
Jess parked opposite the beach. Looking at her taut expression, Alex sensed she had something on her mind. ‘Something bothering you?’ he asked. He took his beanie hat out of a pocket and rammed it on.
Jess glanced at him. ‘You know me so well,’ she said, her eyes sparkling at him. ‘Let’s walk.’
The sea was rough, choppy waves with angry white crests crashing against the rocks. He took her hand and led her across the sand. ‘Tell me,’ he commanded.
‘You go first,’ she offered.
Alex told her about the row with his father. He told her he’d been brooding, cross with his mother, but was wondering why they’d done it. ‘I mean he’s lost his job, right, so why become a tax exile?’
She chewed her bottom lip, then asked, ‘But what made him finally admit it?’
‘I accused him after he told me they’ve sold Ovington Square. They’ve sold the house here in Croyde too, he said pointing up at it. I’m homeless. At least I’ll have an income from surfing lessons soon.’
Jess threw her hands in the air. ‘That’s it! Your parents are liquidating their property portfolio. They’re avoiding payingcapital gainstax, not income tax.’
‘Income tax, capital gains ... I know nothing about tax. I’ve never paid any,’ muttered Alex.
His girlfriend’s brow was furrowed. ‘But they shouldn’t have to pay tax, not on their home. Unless ...’ She shot a startled look at him. ‘Didn’t you say they haven’t owned the house down here long, that you used to have a much smaller one your parents bought before you were born?’
‘Yeah,’ he said.
She was wagging her head from side to side. ‘That’s it. They’ve used their principal private residence exemption. How long have they had the London house?’
He pinched his nose. How old was he when they moved there, about five? ‘17 years.’
Jess pulled out her phone while Alex drew a circle in the damp sand with his shoe. A little more delving and it became apparent that the Ellises’ potential tax bill was enormous. ‘Wow, if only I was rich enough to have a tax problem that size,’ exclaimed Jess. ‘You can see why it’s worth emigrating. It’s going to run into millions!’
His girlfriend had a point. Who would willingly hand over that sort of money? As Alex mused about the morality of his parent’s actions, giving a last kick at the damp sand, he remembered that something was troubling Jess too.
‘Sorry, I’ve kind of hijacked the conversation. What’s been eating you?’
She chewed at a fingernail. ‘It’s kind of related to tax too.’
‘Right.’
‘It’s been playing on my mind, but I think I have to tell you, then you can decide if you want to do anything about it.’ Alex waited for her to continue. ‘Well, you remember in Portugal, when we were folding laundry in the utility room?’
‘Yeah.’
‘You remember just before your mother tripped and upended her handbag, she was talking about flying to London the weekend we went to Lisbon? Well, that sheet of paper I saw, the one that shows your folks are tax exiles ...’
‘Jess, spit it out,’ said Alex, impatiently.
‘The thing is, getting out of the UK tax system isn’t easy, not if you want to retain links with the UK, like your parents have.’
‘Right.’ Alex’s mind was wandering to thoughts of him and Jess renting a flat together. If he ramped up his new venture, worked flat-out once the season took off at Easter, he could afford his share of the bills.
Jess was still speaking. ‘The thing is, it’s quite complicated being a tax exile and very easy to trip up.’
‘Right.’ He gave his girlfriend a sideways glance. Was it too early to suggest living together?
‘Alex, listen to me please,’ she said in a clipped tone.
