Capital Gains Tax for Non-Residents FAQs
Don’t get caught out
Are you a non-UK resident with a UK property portfolio or an ex-pat who has kept a foothold in the UK property market?
Since April 2015, Capital Gains Tax (CGT) is now charged on the sale of UK residential properties by non-resident individuals and offshore trusts. These gains are known as NRCGT gains (or, as the case may be, NRCGT losses). While this has been in effect for more than three years, many are still unfamiliar with the rules. Below, we provide some frequently asked questions and answers to help ensure you don’t get caught out.
Who falls within the CGT charge?
- Non-UK resident individuals
- Non-UK resident trusts
- Non-UK resident personal representatives of a deceased person, and
- Non-UK resident companies controlled by five or fewer persons.
The charge is reportable and payable within 30 days of the sale. If the person or entity has a Self-Assessment record, then they may pay the tax liability in accordance with the normal time limits but this does not change the 30 day reporting deadline. Late filing penalties will be charged if the reporting deadline is missed.
What rate of tax applies?
The charge is assessed on any gain made on sale of a UK residential property interest during the period since these rules were introduced. There are three methods of calculating the charge:
- Re-basing the cost to the property’s market value at 5 April 2015
- Straight line apportionment of the taxable gain between pre and post 6 April 2015 periods, and
- The charge of the whole gain
Currently, UK resident individuals are liable to CGT at a rate of 18% rising to 28% on larger capital gains. These rates apply to NRCGT gains, accruing to non-UK resident individuals or trusts, where the total net gains exceed the annual exempt amount.
Are there any exemptions?
- Non-UK resident companies are liable to corporation tax on this type of sale in addition to the ATED-related charge.
- Unlike the ATED-related charge there isn’t any exemption for property developers or businesses that let the property on a commercial basis.
- Some types of buildings are excluded such as hotels, care homes and large student accommodation.
- Principal private residence relief is available to non-UK resident individuals, but this can be hard to obtain while remaining non-resident.