Andrew Baker - Taxation Consultant
www.baktax.com
UK tax advice for residents worldwide – including Non-Resident Landlords, Pilots, Aircrew, Seafarers, Yacht Crew and Non-Doms
Telephone:
+44 (0)1243 582926
Mobile: +44 (0)7795671536
Email: baktax@aol.com
Non-Resident and Capital Gains Tax
With effect from 6th April 2015, non-resident individuals who dispose of UK residential property will potentially be liable to capital gains tax on any gain realised between 6th April 2015 (or later if acquired after this date) and the date of disposal.
Furthermore, from 6th April 2019 the capital gains tax rules were extended to include the disposal of all
UK property owned by non-residents, including commercial property and land etc.
This is unlike the disposal of other chargeable assets which are exempt provided 5 complete tax years of non-residence is achieved.
Temporary non-residents, i.e. those who do not achieve 5 years of non-residence, are assessed for capital gains tax on all gains realised from the date of becoming non-resident, in the tax year of returning to the UK and becoming UK resident.
It is recommended that a written valuation is obtained from an estate agent or valuer of the market value of UK residential property owned at 6th April 2015 as evidence of the base cost for calculating the capital gain on any subsequent disposal. Alternatively, the capital gains tax calculation can be made on a "straight line" basis by using the original acquisition cost and time apportioning the gain from 6th April 2015 to the date of disposal.
The legal/sale costs (and possibly the purchase and any capital improvements costs) can be deducted to reduce the chargeable gain.
In addition to the availability of the annual exemption (which is being reduced from £12300 to £6000 from 6th April 2023 and reduced further to £3000 from 6th April 2024), there are other reliefs that may be available to reduce the taxable gain.
Where you have lived in the property and established it as your principle private residence at some stage during ownership (the usual recommendation is to physically reside in the property for at least 6 months, although it is a quality rather than quantity test), in addition to that period (if relevant) the last 9 months of ownership is also exempt by time apportionment of the gain (previously the last 36 months of ownership was exempt up to 5th April 2014 reduced to the last 18 months being exempt up to 5th April 2020).
Further relief may also be available in respect of the let period if the property has been established as your principal private residence at some stage during ownership.However, from 6th April 2020 this relief has been restricted to owners who have shared occupation with the tenants.
An online declaration of the disposal and payment of any capital gains tax due must be made to HMRC within 60 days of completion (30 days for disposals prior to 27th October 2021 Budget day), otherwise late filing/payment penalties will be levied. A declaration is required even where there is no capital gains tax liability to pay ie where there is a loss or the gain is covered by exemptions/reliefs.
An online declaration of the disposal and payment of any capital gains tax due must be made to HMRC within 60 days of completion (30 days for disposals prior to 27th October 2021 Budget day), otherwise late filing/payment penalties will be levied. A declaration is required even where there is no capital gains tax liability to pay ie where there is a loss or the gain is covered by exemptions/reliefs.
Where the property is owned in joint names, each individual has to make a separate declaration. Similarly, separate declarations have to be made where more than one property is disposed of.
Since 6th April 2020, UK resident individuals have also been required to make an online declaration and pay any capital gains tax due on the disposal of UK residential property within 60 days of completion (30 days for disposals prior to 27th October 2021 Budget day). However, unlike non-residents, a declaration is not required if there is no capital gains tax liability to pay.
Since 6th April 2020, UK resident individuals have also been required to make an online declaration and pay any capital gains tax due on the disposal of UK residential property within 60 days of completion (30 days for disposals prior to 27th October 2021 Budget day). However, unlike non-residents, a declaration is not required if there is no capital gains tax liability to pay.
The rates of capital gains tax charged on the disposal of capital gains in general eg from the sale of shares etc (including commercial property) was reduced to 10% and 20% (dependent upon the usage of the basic rate income tax band) from 6th April 2016. However, the rates chargeable on the disposal of UK residential property are at 18% and 24% (prior to 6th April 2024 the higher rate was 28%).