Capital Gains Tax for Non-Residents Selling UK Property

If you're not a UK resident but sell or dispose of UK property or land, you need to pay Capital Gains Tax on any gain you make. You must report the disposal to HMRC within 60 days of completion and pay any tax due, even if you have no tax to pay or make a loss.

Introduction

Who this applies to

From 6 April 2020, non-resident Capital Gains Tax applies if you sell or dispose of:

Residential UK property or land (including any buildings on the land)
Non-residential UK property or land
Mixed use UK property or land (for example, a flat connected to a shop or office)
Rights to assets that derive at least 75% of their value from UK land (indirect disposals)

Residential property includes buildings used or suitable for use as a dwelling, properties being constructed or adapted as a dwelling, gardens or grounds of such buildings, and the right to get a UK dwelling 'off plan'.

Non-residential property includes commercial property (such as shops or offices), agricultural land, forests, and any other land or property not used as a residence.

Different rules for non-resident companies

From 6 April 2019, non-resident companies pay Corporation Tax rather than Capital Gains Tax on gains from UK property or land. If you don't already submit a Corporation Tax return, you must register your non-resident company for Corporation Tax.

Calculating your gain

If you owned the property before 6 April 2015, you only pay tax on any gain made since that date. There are three methods to calculate your gain or loss:

Rebasing from 5 April 2015

The standard approach is to use the market value at 5 April 2015. You:

Establish the value of your property as of 5 April 2015
Work out the difference between the value on 5 April 2015 and the disposal value
Deduct any improvement costs incurred from 5 April 2015 onwards and legal costs of selling the property

For example: if you acquired a property in January 2011 for £500,000 and sold it in June 2016 for £1,250,000, with disposal costs of £30,000 and a market value of £1,000,000 at 5 April 2015, your gain would be:

Net disposal proceeds: £1,220,000
Market value at 5 April 2015: £1,000,000
Gain: £220,000

Time apportionment

You can work out a simple straight-line time apportionment of the whole gain over the period you owned the property. Using the same example, if total ownership was 65 months and the period from 5 April 2015 to disposal was 14 months:

Total gain over ownership period: £430,000
Time apportioned gain (£430,000 × 14/65): £92,615

Gain over whole period

This method may only be worth considering if you've made a loss, as you would pay tax on the entire gain.

Private Residence Relief

You may not pay any tax for tax years in which you, your spouse or civil partner spent at least 90 days in your UK home. To qualify, you must nominate the home as your only or main home when you tell HMRC you've sold it.

You get full tax relief for the last 9 months you own your home if you qualify for tax relief for any period. If you're disabled or in long-term residential care, this final period extends to 36 months.

You may still owe some tax if:

You let part of your home out (not including having a lodger)
You used part of it for business only
The grounds of your home, including all buildings, were greater than 5,000 square metres (just over an acre)

Indirect disposals

An indirect disposal occurs when you sell or dispose of your interest in an asset that derives 75% or more of its gross value from UK land (including any buildings on that land). You must have at least a 25% interest in that asset for it to be an indirect disposal.

HMRC takes into account spouses, civil partners and descendants when working out if you have a 25% interest. Gains on indirect disposals are worked out using the value of the asset disposed of, rather than the underlying value of the UK land.

Reporting deadlines

You must report and pay any Capital Gains Tax due within:

60 days of selling the property if the completion date was on or after 27 October 2021
30 days of selling the property if the completion date was between 6 April 2020 and 26 October 2021

You may have to pay interest and a penalty if you don't report and pay on time. You must report even if you have no tax to pay or made a loss.

How to report

Use an online Capital Gains Tax on UK property account to report your disposal. You'll need:

The address and postcode of the property
Date you got the property
Date you exchanged contracts when selling
Date you stopped being the property's owner (completion date)
Value of the property when you got it and when you sold it
Costs of buying, selling or making improvements
Details of any tax reliefs, allowances or exemptions
Property type

If you cannot report online, you can use a Capital Gains Tax on UK property form to report by post. HMRC will send you a 14-digit payment reference number starting with 'x' after you've reported, which you'll need to pay any tax due.

Jointly owned property

If the property was jointly owned, you must report the disposal and give details of your own gain or loss. Special rules apply if you give a UK property to your spouse, civil partner or charity.

Using the Capital Gains Tax calculator

HMRC provides a non-resident Capital Gains Tax calculator to work out what tax to pay if you've sold or disposed of a UK residential property since 6 April 2015.

You can use this calculator if you're a non-UK resident individual who sold or gave away your entire share of a UK residential property, but you cannot use it if:

You used all or part of the property to conduct business
Your property, garden and grounds take up more than 0.5 hectares
You're an agent, company, trustee or personal representative
You're a higher or additional rate band taxpayer
You've only sold or given away part of the property
You've sold or given away non-residential UK property or land
You've made an indirect disposal of UK land

The calculator can help you decide which method of calculating your gain is best if you owned the property at 5 April 2015, and can also calculate Private Residence Relief.

Tax agents

If you would like an agent to report the sale on your behalf, you must first set up an online Capital Gains Tax on UK property account, then give the agent your account number and country of residence so they can email you a link requesting access. Once you accept the authorisation request, your agent can report and manage your account on your behalf.

Sources

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.