UK property Capital Gains Tax for UK non-residents

Foreigners & Non-residents & UK property Capital Gains Tax

All foreign non-residents must report & pay UK Capital Gains Tax when selling property within 60 days of disposal.

Expats and landlords looking to make property disposals must get accurate property investment advice beforehand.

This article reviews regulations around property disposals for nonresidents in the UK and foreign investors. It is important to know that HMRC will issue fines if the CGT reporting is not carried out within 60 days of disposal.

What are the basics of UK property Capital Gains Tax for foreign non UK residents?

Capital Gains Tax (CGT) is the tax due on the profit received once a property is sold by a foreign investor and non-UK residents. 

The total gain is calculated by subtracting the sale value from the original purchase value.

Once the total gain has been calculated, any tax relief and tax-free allowances are considered before calculating the CGT charge using the appropriate rate.

UK Nonresidents, foreign investors and expats are liable to Capital Gains Tax (CGT) on any gain from 5th April 2015 from disposals of residential property.

A UK nonresident, foreigner or expat is also liable to CGT on the gain arising after 5th April 2019 on disposals of UK residential property.

If you are a nonresident who has sold or disposed of UK property or land, you are likely required to submit a nonresident, foreigner or expats UK Capital Gains Tax return within 30 days of the conveyance date.

Land for these purposes also includes any buildings on the land, and disposals will stand under the same rules.

Foreigners, Non-residents or ex-pats are entitled to the CGT annual exempt amount and Private Residence Relief (PRR).

Even if no CGT charge arises, a tax return must still be filed to HMRC in the UK. Find out more here.

HMRC extended their Nonresidents Capital Gains Tax (NRCGT) regime from 6th April 2019 to include direct and indirect disposals of all UK property and land.

As foreign ex-pats or a nonresident, you have 30 days to tell HMRC about the sale by submitting an NRCGT return.

From 6th April 2020, you need to report and pay your non-residents Capital Gains Tax (CGT) and submit a non-residents Capital Gains Tax return if you’ve sold or disposed of:

– residential UK property or land

– non-residential UK property or land

– mixed-use UK property or land

– rights to assets that derive at least 75% of their value from UK land (indirect disposals)

A ‘mixed use’ property has both residential and non-residential elements.

This could include a flat connected to a shop, GP surgery or office. This type of property is included in disposals.

You must report and pay nonresidents Capital Gains Tax in the UK if you’re a nonresident/foreigner investor:

– the personal representative of a nonresident who has died

– a who’s in a partnership

– property landlord

– trustee

You must report and pay CGT within 30 days of completion of the property or land disposals.

Your self-assessment tax return must also include nonresident capital gains from any sale or disposal of property or land in the UK.

Many foreigners & expats are not aware of the 60 day reporting requirements when selling property. This leads to unnecessary fines and penalties from HMRC.

What CGT do I report & pay to HMRC as a foreign investor?

From 6th April 2019, all non-residents and, foreign investors & expats were brought within the scope of CGT on disposals of all land and property.

Before this, between 6th April 2015 and 5th April 2019, Non-Resident CGT (NRCGT) was due by UK nonresident & foreign investor individuals for the tax year of any disposals.

In each case, whether or not you were temporarily non-resident/foreigner at the time of any disposals was irrelevant.

If you owned a UK property as a non-resident / foreign investor before 6th April 2015, then broadly speaking, you will only be liable to tax on the part of the gain accrued from 6th April 2015.

If you purchased the property after 6th April 2015, the whole gain would be chargeable on the disposals, subject to Private Residence Relief. Foreign investors that never lived in the property would not benefit from this tax saving.

If you owned the property or land before 6th April 2019, you would only be liable for part of the gain accrued from 6th April 2019.

The whole gain would be chargeable on any disposals if you purchased the property after 6th April 2019.

You may also have a CGT liability on any gain not included above if you are a temporary nonresident or individuals classified as expats or foreign investors.

Foreign investors, UK non-residents and expats are also liable to CGT if they are carrying on a trade and dispose of assets used in that trade.

What happens if I sell a property in the UK while non-resident / foreign investor?

The first thing to do is check that you are non-residents or classified as expats in the UK.

If you are a resident, you will be fully liable to CGT on disposals of assets located anywhere in the world, not just your UK-located assets and disposals.

You must report the property or asset disposals within 60 days of completion (or within 30 days if the disposal was completed before 27th October 2021).

To calculate the gain to report, there are two steps:

– you must first calculate the amount of the gain in the scope of UK CGT (or NRCGT for disposals of UK residential property before 6th April 2019).

– For this part, you must determine how much Private Residence Relief (PRR), if any applies to the gain

You will have the annual exempt amount (£12,300 for 2022-23) to offset any gain that PRR does not cover.

If you then return to the UK after a period of temporary non-residence, you will need to consider whether you have a UK CGT liability on the part of the gain, which was included in part one above.