Capital Gains Tax For non-UK Residents

Since 6 April 2015 HMRC have been charging capital gains tax on property disposals by non UK residents. This means that HMRC now need to be informed of a property sale owned by a non-resident individual, company or fund and CGT has to be paid on the disposal within 30 days of the date of sale. For properties that are owned jointly, each person must inform HMRC of the sale on separate tax returns.

Individuals have a tax-free allowance for capital gains, which is currently £11,100 for the tax year to 5th April 2016.


Calculating and Paying CGT


In practise it may be necessary to estimate the CGT due because the tax rate is determined by UK income earned in the tax year in which the property was sold, and this may not be known at the time of the sale.

If you have had to use estimated amounts in order to meet the deadline for reporting a property disposal to HMRC then you will need to change your tax return once you know the confirmed figures. Changes can be made up to a year after the self-assessment filing deadline.

HMRC must be informed of the disposal even if there is no tax to pay or the disposal resulted in a loss. This applies to everyone, including individuals registered for self-assessment, companies registered for corporation tax and those who pay Annual Tax on Enveloped Dwellings (ATED).

If you do not inform HMRC within 30 days or make a late payment then penalties will apply.


Residential Property Definition

HMRC treat all of the following as residential property for the purposes of the CGT rules:

  • Properties still being built
  • Buildings being converted to a dwelling
  • ‘Off plan’ purchase agreements

If the property has been your main home but you have let it out, used it for business purposes or not lived there for long periods of time then it will also fall under these CGT rules.

HMRC does not consider land on which construction of a property has not yet started to be residential property so this would be exempt.


Future Property Disposals

Even if you haven’t sold a property you may plan to do so at some future date and it’s market value on 5 April 2015 will need to be used in the calculation of any capital gain. Therefore, it is important get a valuation of the property as soon as possible and to keep a formal record of the value to use in determining any gain or loss, and, therefore, any CGT tax liability.

Property Disposals by Companies

This tax will hit most UK properties held in overseas companies, including offshore companies but also UK companies which are owned and managed abroad. Companies will have to pay the tax at a rate of 20% but there are ways in which gains and losses can be aggregated for group companies so that a consolidated return can be made for all relevant sales of property in a given tax year.

Some types of companies and funds, such as open ended investment companies and unit trust schemes, are exempt from paying non-residents CGT but must still report disposal to HMRC.