Disposals of UK land and property by UK non-residents

Generally, you are only in the scope of UK CGT if you are resident in the UK. If you are UK resident then you a liable to CGT on disposals of assets located anywhere in the world not just those assets in the UK.

However, non-resident individuals are also liable to CGT on disposals of UK land and property.

Temporary non-residence

You will be classed as temporarily non-resident if all of the following apply:

• You have been resident in the UK for at least four out of the seven tax years prior to departure
• You leave the UK and become non-resident
• You then return to the UK after a period of non-residence lasting five years or less

If you are unsure whether you have a period of non-residence lasting five years or less, please contact us. This can be counter-intuitive to calculate and, depending on your circumstances, this period may not reflect the period you were physically outside the UK.

If you realise any gains or losses during a period of temporary non-UK resident they will become chargeable in the tax year you return to the UK. This is to prevent people from leaving the UK and disposing of an asset to avoid a charge to CGT on this disposal.

As a non-resident, when you make a disposal of all UK land and property you should report this to HMRC within 60 days of completion, even if there is no tax due on the disposal. If tax is due on the disposal, this is due for payment within 60 days.

Disposals of UK residential property by non-residents from 6 April 2015

From 6 April 2015 if you sold a UK residential property, then you were liable to be capital gains tax on the gain which accrued from 6 April 2015. You can choose how to calculate the gain on which the tax charge is based in one of three ways:

1. On the difference between the amount the property was sold for and its value as at 6 April 2015. You will need to establish the value of the property as a 6 April 2015.
2. On the difference between the amount the property was sold for and its initial cost and then time apportioning the gain such that the gain for the period from 6 April 2015 would be subject to tax.
3. If you sold the property for less than it cost, then you can calculate the loss over the whole period of ownership, however, the way you can use the loss is restricted.

When using options 2 or 3 an election needs to be made. If the property was your main home during ownership, private residence relief may apply to the chargeable gain calculated under options 1 or 2.

If the residential property was purchased after 1 April 2015, then the whole gain will be used when preparing your calculations.

Disposals of other UK land and property by non-residents from 6 April 2019

From 6 April 2019 the rules were extended to cover non-residential land and property. Although similar to the above you will only be liable to the part of the gain which accrued from 6 April 2019. You can therefore choose how to calculate the gain as follows:

1. On the difference between the amount the property was sold for and its value as at 6 April 2019. You will need to establish the value of the property as a 6 April 2019. Note that it is not possible to do a straight-line apportionment for gains on non-residential property.
2. If you sold the property for less than it cost, then you can calculate the loss over the whole period of ownership, however, the way you can use the loss is restricted.

If you choose to calculate the loss using option 2 you will need to make an election.

If the property was purchased after 1 April 2019, then the whole gain will be used when preparing your calculations.

Once you have ascertained the taxable gain as a non-resident you will need to complete the CGT return and pay the associated tax within 60 days of disposal.

If you then return to the UK after a period of temporary non-residence, you will need to check whether you have a UK CGT liability on the part of the gain which was excluded in the non-resident CGT calculations. This will become chargeable in the tax year of return to the UK.

Overseas Tax

Although tax is due in the UK on these disposals, the gain may still be chargeable in the country of residence. You will need to take tax advice in your country of residence.

If you are liable to tax in another country, you may be able to claim double tax relief.

Please get in touch if you have any questions about UK Capital Gain as a non-resident individual.