Singapore Expat Advisory

UK Capital Gains Tax for Non-Residents

Aussie Tax

If you’re from the UK living abroad as an expat and you wish to sell your property, you may need to pay capital gains tax in the UK. It is always important to consider the UK tax implications on the acquisition, ownership and disposal of any interest in property situated in the UK. Simple and effective advice given at the earliest opportunity can help ensure non-UK residents meet their UK reporting obligations and minimise their tax exposure.

What is capital gains tax?

Capital gains tax is a tax that is owed when you sell or ‘dispose of’ something that you own, assuming it has increased in value.

In the UK, it is most often paid on the sale of property that is not your main residence, on shares that are not in an ISA or PIP, or on business assets; although it is also due on any personal possession valued over £6,000 (excluding most vehicles).

You may be liable to pay capital gains tax on property that you sell, no matter where in the world it is located. If you become a non-UK resident for any length of time and then return, you may be liable to pay capital gains tax on any property you sold while you were a non-resident.

How is capital gains tax calculated?

Capital gains tax in the UK is only charged on profit over the annual capital gains tax allowance (also called the annual exempt amount), which is currently set at £12,300. If no profit is made from the sale, or if the profit is below this amount, no capital gains tax will be charged.

When an asset is sold, the profit from that sale will be calculated using the difference between the purchase price and the sale price, less any expenses such as estate agent fees, solicitor’s fees, advertising etc. Additional expenses accrued upon the original purchase of the asset, such as stamp duty, survey fees, and land duty may also be deducted.

The amount of profit left over after these deductions are made is known as the ‘chargeable gain’, and capital gains tax is levied on this amount.

UK Capital Gains Tax rates

In the UK, Capital Gains Tax for residential property is charged at the rate of 28% where the total taxable gains and income are above the income tax basic rate band. Below that limit, the rate is 18%.

For trustees and personal representatives of deceased persons the rate is 28%.

For non-residential property and other assets, the rates are 10% and 20% for individuals.

When selling a non-publicly listed business, if you are eligible, you may benefit from the equivalent Entrepreneurs’ Relief scheme under which you will only have to pay 10% on the sale of a business or business shares.

What CGT do I pay if I am not resident in the UK?

Non-resident CGT (NRCGT) applied to disposals of UK residential property from 6 April 2015 to 5 April 2019 by individuals who were not resident in the UK for the tax year of disposal. From 6 April 2019, NRCGT was abolished and non-residents were instead brought within scope of ‘normal’ CGT on disposals of all UK land and property.

In each case, whether or not you were, or are, temporarily non-resident at the time of the disposal is irrelevant. You might therefore need to pay some CGT (or NRCGT, as the case may be) when you dispose of the property and again when you return to the UK.

If you are non-resident and you are liable to CGT on a disposal of UK land or property (or, from 6 April 2015 to 5 April 2019, UK residential property) then you may not need to pay tax on the whole gain.

Note, however, that you are required to report the disposal to HMRC within 30 days in all cases, regardless of how much tax is due.

Disposals of UK residential properties from 6 April 2015

If you owned the property before 6 April 2015, then broadly you will only be liable to tax on the part of the gain which has accrued from 6 April 2015. You can choose how to calculate the gain on which the charge is based in one of three ways:

  1. On the difference between (a) the amount the property is sold for and (b) its value at 6 April 2015. You will need to establish the value of the property at 6 April 2015; or
  2. Over the whole period of ownership and then time-apportion it and the part of the gain that relates to the period from 6 April 2015 would be subject to these provisions; or
  3. If you sold it for less than it cost you, then you can calculate the loss over the whole period of ownership, but the way you can use this loss is restricted.

If you wish to choose options 2 or 3 you need to make an election to do so. If the property was at some point your main home, private residence relief may apply to any chargeable gain calculated under options 1 and 2.

If you purchased the property after 6 April 2015, then the whole gain will be chargeable (subject to private residence relief).

If you purchased the property after 6 April 2019, then the whole gain will be chargeable.

If you sell UK land or property which was partly residential in the period 6 April 2015 and 5 April 2019, different rules apply.

If you would like further information on this or any other financial planning topic, contact advice@singaporeexpatadvisory.com or Tel. +65 9342 8781

General Information Only This article should not be construed as an offer, solicitation of an offer, or a recommendation to transact in any products (including funds, stocks) mentioned herein. The information does not take into account the specific investment objectives, financial situation or particular needs of any person. Advice should be sought from a licensed financial adviser regarding the suitability of the investment

Exit mobile version