CGT for Non-UK Residents: Property and Compliance

If you’re a non-UK resident, you may question your obligation to pay Capital Gains Tax (CGT) on assets you own or sell, whether in the UK or elsewhere. Generally, only UK residents must fully pay UK CGT. However, several exceptions could affect you, making it important to understand your specific circumstances regarding CGT for non-residents.

Temporary non-residence

If you have been a UK resident for at least four out of the seven tax years before departing and then return to the UK within five years, you are considered temporarily non-resident. In this case, any gains or losses realised during your period of non-residence may become chargeable to CGT in the tax year of your return. This rule aims to prevent individuals from avoiding CGT by temporarily leaving the UK to dispose of assets.

Disposals of UK land and property

Non-residents are liable for CGT on disposals of UK land and property, including residential and non-residential properties. Since April 2019, this liability has extended to all UK land and property disposals. The calculation of CGT in these cases depends on whether you owned the property before or after the relevant dates, and you may be liable for tax on the gain accrued during your non-residence period.

The UK government website states that UK property and land includes:

• Residential UK property or land (land for these purposes also includes any buildings on the land)
• Non-residential UK property or land
• A ‘mixed use’ property is property that has residential and non-residential elements (for example, a flat connected to a shop, doctor’s surgery or office)
• Rights to assets that derive at least 75% of their value from UK land

Selling a UK home while non-resident

Before selling a UK property as a non-resident, contact us or your accountant or tax advisor to determine your residency to ensure you meet the non-resident criteria. Upon selling your property, you must report the disposal to HMRC within 60 days, and pay any due CGT at this time.

Calculate the CGT by determining the property’s gain, considering the time of purchase and sale, and apply any relevant main residence relief if applicable. This gain should also be included in your self-assessment tax return if you file one. If you return to the UK and are considered temporarily non-resident, you may face additional CGT liabilities on previously excluded gains.

Overseas tax considerations

Remember that each country has its own CGT rules. If you dispose of assets while living abroad, you may be subject to tax on any gains in your country of residence. For country-specific rules, it is advisable to seek local advice. If you are liable for tax on the same disposal in both the UK and another country, you may be able to claim double tax relief to avoid being taxed twice.

Need more guidance on CGT for non-UK residents?

While non-UK residents generally have limited liability for UK CGT, there are important exceptions, especially regarding temporary non-residence and disposals of UK land and property.

Each situation is unique, so understanding your specific tax obligations is important to avoid any unexpected liabilities. If you need tailored advice or have questions about CGT for non UK residents don’t hesitate to get in touch.