How do CGT rules apply to UK non-resident property owners?

The rule used to be that as long as you had been non-UK resident for five consecutive tax years, then you would not be taxed on any gains made when you sold UK property.

However, as off 6th April last year (2015), this is no longer the case.

Now, if you are a British expat or non-resident who owns property in the UK, you will  need to pay Capital Gains Tax (CGT) if you sell your property for a gain. It doesn’t matter how long you have lived outside the UK or even if you never intend to return, the taxman still wants his cut.

How is the tax calculated?

In most cases, you will be able to rebase the value of your property to the 5th of April 2015.

You will then pay tax in the same way as UK residents do. I.e. the net gain (on post 5th April 2015 valuation) less your annual allowance (GBP11,100 in 2016/2017) is added to any other UK income for the tax year in question.

This amount is then taxed at either 18% or 28% depending on whether you fall into the basic or higher-rate tax bracket.

Can it be avoided?

If you lived in the property for 90 days or more in the year in which you sold it, you would meet the conditions for private residence relief (PPR). In this case, you wouldn’t have to pay CGT.

Be careful with this however, as it may push you into a different residence category for tax according to the UK’s Statutory Residence Test. This could have have serious implications on your overall tax position.

Useful link – HMRC provide this handy site for calculating non-resident capital gains tax on property.


Things I’ve been reading this week:

Britain is to ban pension cold calls (The Guardian) – There is a reason for this, GBP19 million was lost as a result of pension fraud last year. Be very wary if someone cold calls you offering “free” pension advice.

Does Your Company Give You Stock? Great. Sell It (Barrons) – There is a danger in relying on your employer for both the income that pays your bills and your overall wealth.

How to become a 2% investor (The Reformed Broker)

It looks like the era of super low interest rates for UK mortgages may be coming to an end (The Telegraph)