Guidance

Capital Gains Tax for non-residents: UK residential property

Find out if you need to pay Capital Gains Tax as a non-resident selling a UK residential property.

Overview

You need to tell HM Revenue and Customs (HMRC) if you’ve sold or disposed of a UK residential property after 5 April 2015 if you’re a:

  • non-resident individual
  • personal representative of a non-resident who has died
  • non-resident who’s a partner in a partnership
  • non-resident landlord
  • non-resident trustee
  • non-resident company or fund
  • UK resident meeting split year conditions and the disposal is made in the overseas part of the tax year

Deadline for reporting the disposal and payment

You must tell HMRC within 30 days of conveyance, for example no later than 31 July if you convey on 1 July.

You must report the disposal online using the non-resident Capital Gains Tax return within this deadline, even if:

  • you’ve no tax to pay
  • you’ve made a loss
  • you’re registered for Self Assessment
  • you’re registered with HMRC for Corporation Tax
  • you send HMRC Annual Tax on Enveloped Dwellings (ATED) or ATED-related Capital Gains Tax returns

If a property was jointly owned each owner must tell HMRC about their own gain or loss. Special rules apply if you give a UK residential property to your spouse, your civil partner, or to charity.

You might also have to pay any non-resident Capital Gains Tax due within the same 30 day period - although there are exceptions to the pay now rule if you already have an existing relationship with HMRC, for example through Self Assessment. If you do, you can either:

  • pay when you submit your return
  • defer payment until your normal due payment date

Penalties

You have 30 days from the date of conveyance to report your disposal on the non-resident Capital Gains Tax return and pay any tax due. You’ll get a late filing penalty and be charged interest if you don’t do this by the 30 day deadline.

If you miss the deadline by:

  • up to 6 months, you will get a penalty of £100
  • more than 6 months, a further penalty of £300 or 5% of any tax due, whichever is greater
  • more than 12 months, a further penalty of £300 or 5% of any tax due, whichever is greater

If you have to pay any non-resident Capital Gains Tax within the same 30 day period, late payment penalties and interest may also be due if you miss the deadline.

If any non-resident Capital Gains Tax remains unpaid after 31 January following the end of the tax year of the disposal then a late payment penalty of 5% of the tax outstanding will be charged.

Calculate what you need to pay

Work out what you need to pay if you’ve sold or disposed of a UK residential property since 6 April 2015.

You can use the non-resident Capital Gains Tax calculator if you’re a non-UK resident individual who’s sold or given away your entire share of a UK residential property. The calculator will take you about 10 minutes to use.

Don’t use the calculator 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’ve sold or given away a part share of your UK residential property

This is a beta service.

Reporting disposals

You must complete a separate return for each disposal, and any amendments you make. When you report the disposal, you need to include a computation of your gain or loss with your return.

You don’t need to do this if you’re a fund or company claiming exemption from tax, or you’ve elected to defer payment.

If you choose to defer payment, the computation should be included with the relevant Self Assessment or ATED-related Capital Gains Tax return and payment made as part of your normal end of year payment.

Temporary non-residents

Different rules apply if you’re temporarily non-resident and make disposals during a tax year when you were either non-resident or during the overseas part of a split year.

If you meet the temporary non-resident rules then the portion of gain not charged to non-resident Capital Gains Tax will come within the scope of UK Capital Gains Tax for the year, or period of return to the UK.

If you don’t meet the temporary non-resident rules there won’t be an additional UK Capital Gains Tax charge for the earlier disposal when you return to the UK.

Individuals (including trustees and executors, or personal representatives of a deceased person) are entitled to the Capital Gains Tax Annual Exempt Amount (AEA). You can only use the AEA once in a tax year, even if it was a split year.

Personal representatives of a deceased person who lived abroad

If you’re the personal representative of a deceased person who lived abroad and UK residential property has been disposed of after 5 April 2015, you’ll need to report the disposal to HMRC.

The AEA is available for disposals in the same tax year as the death or the following 2 tax years.

What counts as residential property

You must tell HMRC and may have to pay Capital Gains Tax when you sell or dispose of:

  • an interest in UK residential property
  • properties in the process of being constructed or adapted for use as a residential property
  • the right to acquire a UK residential property ‘off plan’

If the property has had mixed use it still counts as residential and you’ll be able to make a reasonable apportionment when calculating the gain or loss.

What isn’t residential property

Residential property doesn’t include:

  • care or nursing homes
  • school pupil accommodation
  • purpose built student accommodation
  • building land, provided no residential building is under construction - this doesn’t include disposals of rights to acquire UK residential property ‘off plan’
  • hospitals or hospices
  • military accommodation
  • prisons

Student accommodation must meet certain conditions to qualify. The building must:

  • have 15 bedrooms or more
  • be purpose built for students
  • be occupied by students for at least 165 days in the tax year for the purpose of undertaking a course of education

Tax returns

When you report the disposal you can elect to pay any Capital Gains Tax you owe as part of your normal end of year tax payment for:

  • Self Assessment
  • Corporation Tax
  • Capital Gains Tax
  • ATED-related Capital Gains Tax

You can also pay when HMRC sends you the reference number.

You must still fill in the capital gains section of your tax return for the year of disposal, unless the gain is exempt due to Private Residence Relief.

If the disposal is also subject to ATED-related Capital Gains Tax you must also declare the non-resident Capital Gains Tax on the ATED-related Capital Gains Tax return.

Amending your return

You might need to use estimated figures when you report a disposal to HMRC. If you have taxable UK income this may affect the rate of non-resident Capital Gains Tax you pay.

You must report the disposal of your property within 30 days of conveyance so you might need to estimate your taxable UK income on your non-resident Capital Gains Tax return.

You can use the online form to send an amended non-resident Capital Gains Tax return showing your final figure.

You can make an amendment to your return up to 12 months after the Self Assessment filing date of the year you’re making the return. For example, if you made a disposal between 6 April 2015 and 5 April 2016, you could make an amendment to your return up to 31 January 2018.

Record keeping

You need to keep records to support the gains or losses you report to HMRC.

If your computation uses a market value, for example if you owned the whole or part of an interest in a UK residential property at 5 April 2015, it’s your responsibility to accurately value the property.

Depending on the property concerned you may want to use a professional valuer or get more than one valuation.

Using a tax agent or adviser

You can give HMRC limited authorisation to deal directly with your agent or advisor. Limited authorisation means this authorisation only applies to matters concerning non-residents Capital Gains Tax.

Send an email to non-residentcgt.spt@hmrc.gsi.gov.uk to do this.

You don’t need limited authorisation if you already have appropriate authorisation in place for someone to deal with HMRC on your behalf about your Income Tax.

The Annual Tax on Enveloped Dwellings: ATED 1 form doesn’t cover authorisation for non-resident Capital Gains Tax.

Companies

If you’re a company, you’ll:

  • pay 20% tax on your chargeable gains
  • have access to limited indexation allowance to allow for the effect of inflation on the costs of acquisition when calculating the chargeable gain

Group companies can enter into pooling arrangements to aggregate gains and losses.

Closely-held companies

A ‘closely-held company’ is one which either:

  • is under the control of 5 or fewer persons that have an interest in the company
  • 5 or fewer participators are entitled to acquire rights to the greater part of the company’s assets on a winding up order and none can be diversely held

Only non-resident close companies and funds not meeting the genuine diversity of ownership test will be subject to the non-residents Capital Gains Tax charge.

If a participator is diversely-held, that doesn’t exclude the non-resident company from the charge. A diversely-held company is a company that isn’t closely-held. This includes:

  • a company which is itself a diversely-held company
  • an institutional investor (such as a widely-marketed unit trust or open-ended investment company)
  • a loan creditor of the company which is itself a diversely-held company or qualifying institutional investor

For protected cell companies, the test is applied to each cell or division of the company, not just at the level of the company.

Exempt companies

These companies or funds are exempt from the non-residents Capital Gains Tax charge and need to claim the exemption when reporting the disposal:

  • qualifying diversely-held company
  • qualifying unit trust scheme
  • qualifying open ended investment company
  • life assurance companies holding the property as part of their portfolio of investments to provide policyholder benefits, and not otherwise exempted as diversely-held companies

Pooling for group companies

Group companies can enter into pooling arrangements to aggregate gains and losses on UK residential property across a group. Where a pooling arrangement is in place a representative company will be responsible for making a consolidated return of all relevant disposals during the relevant period.

The members of the non-residents Capital Gains Tax pooling group are jointly and severally liable for the tax. Liability starts when a member joins the group, in respect of any liability arising before or after that date. Liability continues up to the time when they cease to be a member of the group. The liability remains after a company has left the group but only for any unpaid liability that arose before it ceased to be a member of the group.

If the representative company of the non-residents Capital Gains Tax group leaves, but the group continues to exist, with unpaid liabilities and insufficient assets to service those liabilities, the company should remain liable for the debts that arose.

For companies that don’t belong to a group, or where no election is made for pooling, gains and losses will be treated in the same way as they are for individuals.

There will be a de-pooling charge on companies that leave a pooling arrangement.

Published 6 April 2015
Last updated 7 August 2017 + show all updates
  1. Section on penalties has been updated to explain when interest could be charged.
  2. The Penalties section has been updated and a new bullet has been added to 'what isn’t residential property' section.
  3. Paragraph 'Temporary non-residents - making disposals in the overseas part of a split year' title changed to 'Temporary non-residents'. Minor text change to first sentence.
  4. Rates, allowances and duties have been updated for the tax year 2016 to 2017.
  5. First published.