Since April 2015, gains made by non-UK resident individuals on the disposal of residential properties have been subject to Capital Gains Tax (CGT). Non-UK resident individuals are subject to CGT at 18% or 28% depending on whether the individual has any basic rate band remaining (after the calculation of their income for income tax purposes).
Rule changes from April 2019
In addition to the 2015 rule changes, since 1 April 2019 for Non- UK resident companies and 6 April 2019 for Non-UK resident individuals, gains on the sale of UK commercial properties and UK residential properties by companies have been also been subject to CGT.
The rule changes in the last 6 years are in stark contrast to the UK previously not CGT on sales of any UK property made by Non-UK resident individuals or companies. Previously, in some countries where the investors were resident, they were not subject to tax for gains outside of their country resulting in completely tax free gains.
Reporting and payment requirements
A non-resident Capital Gains Tax return must have been submitted if UK property or land was sold or disposed of up to 5 April 2020.
From 6 April 2020 CGT must be reported and paid using the Capital Gains Tax on UK property service if the following has been sold or disposed of:
- residential UK property or land (land for these purposes also includes any buildings on the land)
- non-residential UK property or land
- mixed use UK property or land
- rights to assets that derive at least 75% of their value from UK land (indirect disposals)
In addition, a tax return must be filed which can be shared by the UK with tax treaty countries
From 27 October 2021, capital gains tax must be reported and paid within 60 days of completion of conveyance.
If the completion date was between 6 April 2020 and 26 October 2021 CGT should have been reported and paid within 30 days of completion of conveyance.
If any reporting or payment deadline is missed a late filing penalty and interest may be charged.
Next steps
- Obtain a valuation as at 1 April 2019. This does not need to be filed with the UK tax authorities but when the property is sold, a written valuation prepared by an expert in the field is unlikely to be challenged. For higher value properties it may be sensible to get a full valuation carried out be a chartered surveyor rather than an estate agent’s letter.
- There are exemptions if a property is used as part of a trade, say a pub or nursing home. Professional advice should be sort on this.
- Ensure that your accountant is kept up to date with all sales before completion is made on a UK property, to ensure all filing and payment deadlines are met.
