Selling UK property as a non-resident

Many expats who own UK property are surprised to discover that selling their property while living abroad does not remove them from the UK tax liability.

The same can also be true in reverse; selling an overseas property while living abroad can unexpectedly give rise to a UK tax charge, either because you are still a UK resident under the Statutory Residence Test without fully realising it, or because you left the UK relatively recently and the temporary non-residence rules apply.
These are areas we encounter regularly, and they are precisely the kind of situations where taking advice before a sale is agreed, where possible, can make a significant difference. Even where a sale has already occurred, advice can still be valuable.

The 60-day reporting requirement

When you dispose of UK land or property as a non-resident, HMRC requires both a return and payment of any tax due to be made within 60 days of the completion date. This applies to all UK land and property disposals, whether residential, commercial or mixed use, and it operates entirely independently of your annual Self-Assessment return.
Even if no tax is ultimately due, a Non-Resident Capital Gains Tax return must still be filed with HMRC within 60 days. This is a standalone return, and is submitted through a dedicated HMRC online service.

Where you are also required to file a Self-Assessment return for the tax year, the disposal must be included there as well, with any tax already paid through the 60-day process credited against your annual liability. We can advise you on whether Self-Assessment applies to your situation.

Missing the 60-day deadline results in an immediate penalty from HMRC, with further penalties accruing over time. We can ensure everything is reported correctly and filed on time, so you can relax.

Reliefs and exemptions which can reduce the tax

For many expats selling a property that was once their main home, Principal Private Residence relief (PPR), can significantly reduce, or in some cases, eliminate the chargeable gain, based on the periods of occupation relative to total ownership. There is also an automatic final period exemption covering the last nine months of ownership, and periods of absence for reasons such as overseas employment may qualify under specific rules. Claiming PPR relief as a non-resident comes with specific conditions attached, which are worth understanding before a sale is agreed rather than after.
For properties that were not your main home, such as rental properties, second homes, or commercial property, PPR relief will not apply, but other reliefs and deductions remain available.

How your property gain is calculated, and why the date matters

The calculation of your gain depends on when you acquired the property and what type of property it is.

For residential property you owned before 6 April 2015, the gain is generally calculated by reference to the market value of the property on that date, rather than your original purchase price, a process known as rebasing. This means that only the growth in value from April 2015 onwards is brought within the charge to UK CGT.

For non-residential property sales and share sales where land or buildings are held within a company, the equivalent rebasing date is 6 April 2019. This is a distinction we find many clients are unaware of, and it can make a significant difference to the final calculation. We always work carefully through the numbers with each client to ensure the correct basis is used.

If you return to the UK

It is also worth being aware that if you return to the UK within five years of leaving, any property anywhere in the world (or certain other assets) sold during that time can, in certain circumstances, fall into the charge to UK tax.

These are known as the temporary non-residence rules, and they can give rise to an unexpected tax charge for those who have not planned ahead.

How we can help

Disposing of UK property as a non-resident involves strict deadlines, careful calculations and application of a number of reliefs that can only be claimed if the correct elections are made at the right time.

We assist clients at every stage of the process, from initial planning before a sale is agreed, through to preparing and submitting the return and corresponding with HMRC where necessary.

Have you recently sold, or are you considering selling, a UK or overseas property while living abroad? Get in touch, and we will make sure you have everything covered.