Guide to CGT rules for UK expat property owners (updated to include October 2021 changes)

The rule used to be that as long as an expat had been non-UK resident for five consecutive tax years, then they would not be taxed on any gains made when they sold UK property.

However, as of 6th April 2015, that ceased to be the case.

Now, if you are an expat who owns UK property, you will potentially need to pay Capital Gains Tax (CGT).

It doesn’t matter how long you have lived outside the UK or even if you never intend to return, the taxman still wants his cut.

How is Capital Gains Tax on UK property calculated for expats?

In most cases, you will be able to rebase the value of your property to the 5th of April 2015.

You will then pay tax in the same way as UK residents do. I.e. the net gain (on the post 5th April 2015 valuation) less any unused annual allowance (GBP12,000 in tax year 2019/2020) is added to any other UK income for the tax year in question.

Depending on your tax bracket, this amount will then be taxed at either 18% or 28% .

Useful link – HMRC provide this handy site for calculating non-resident capital gains tax on property.

Can expats avoid paying Capital Gains Tax on UK property?

If you lived in the property for 90 days or more in the year in which you sold it, you would meet the conditions for private residence relief (PPR). In this case, you wouldn’t have to pay CGT.

Be careful with this however. It may push you into a different residence category for tax according to the UK’s Statutory Residence Test. This could have have serious implications on your overall tax position.

How do I report the gain and when is the tax payable?

You have 60 days from the date of sale to complete a Non-Resident Capital Gains Tax Return.

It is important to note that this return needs to be completed even in cases where no capital gain has been made, or assumed to be made

Any CGT incurred following the disposal of the property will have to be paid within the same 60 day period.

Failure to pay on time will result in HMRC imposing interest and potential penalties. 

This rule also applies even where no money has changed hands. For example, the rule will also apply when a property is transferred into trust or gifted to a family member.

Resources

Tell HMRC about Capital Gains Tax on UK property or land if you’re non-resident


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By Ross Naylor

Ross has been a financial adviser for the past 26 years. He uses the experience that he has gained over this time to help busy expats to understand their options, make smart decisions and avoid costly mistakes.