Andrew Baker - Taxation Consultant

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

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.

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 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 annual exemption (available to EEA citizens and individuals who are a national or resident of a country with whom there is a double taxation agreement with the UK which grants personal allowances) there are other reliefs that may be available.
Where you have lived in the property and established it as your principal 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 18 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). 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.

An online declaration of the disposal has to be made to HMRC within 30 days of conveyance, even where there is no tax liability to pay, otherwise penalties may be levied. 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.

If registered under self-assessment and you have a Unique Tax Reference number, an election can be made to defer the payment of any capital gains tax liability until the usual payment date of 31st January following the end of the tax year in which the gain was realised. Otherwise, the capital gains tax is payable within 30 days of conveyance.

UK resident individuals will also be required to pay capital gains tax on the disposal of residential property within 30 days of conveyance with effect from 6th April 2019.

The rate of capital gains tax payable on the gains realised upon the disposal of UK residential property will not benefit from the decrease to 10% / 20% for general capital gains announced in the 2016 Spring Budget and effective from 6th April 2016. Instead, the rate of capital gains tax payable will remain at 18% / 28%, dependent upon whether or at what point the assessable gain when added to UK assessable income breaches the higher rate tax band.

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