Non-UK residents must pay CGT on UK residential property

UK homeowners that don’t spend sufficient time in, or have sufficient ties with, the UK to be resident for tax purposes could be required to pay capital gains tax (CGT) on any profits arising from the eventual sale of the property.

At present, individuals residing in the UK – including those not domiciled here – pay CGT at either 18 per cent or 28 per cent of any profits arising from the disposal of UK assets.

Individuals will also pay CGT on the disposal of assets located overseas, but non-doms (those not domiciled in the UK) can also ask to be taxed only on foreign profits that are brought to or used back in the UK.

Up until now, non-UK residents have not generally been liable to CGT on any gains; even those arising from the disposal of UK property.

The disparity between CGT treatment of residents and non-residents has subsequently been tackled by the Government.

From 6 April 2015, non-UK residents must pay CGT on any gains from the disposal of any UK residential property, even if it is rented out. Non-UK residents will however remain exempt from CGT on disposals of commercial property and any other assets.

A ‘disposal’ not only relates to a property sale but any property that has been gifted too.

There are many ways to calculate gains and non-residents are encouraged to seek professional advice to ascertain the most appropriate method of calculation for future reference.

Any UK non-resident that normally files a self-assessment tax return must include any gains in the appropriate year’s return; otherwise any outstanding tax must be paid within 30 days of completion.

The new CGT charge will also apply to non-UK resident trusts, partnerships and companies which own and dispose of UK residential property. However, institutional investors and certain diversely-held companies are specifically excluded.

Date published 5 May 2015 | Last updated 29 Apr 2015