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Disposal of UK property by non-UK residents

By Kevin Russell | 5 April 2015

Until April 2015, the disposal of UK residential property by an individual that was not resident in the UK for tax purposes was not subject to Capital Gains Tax. This is all set to change from 6 April 2015.


This change will affect individuals who have left their UK home to work abroad, for example as missionaries, and who stay abroad but decide to sell their UK home.


Broadly speaking, Capital Gains Tax (‘CGT’) is payable on the difference between the price that the house is sold and the price at which it was bought (although, as with all tax, it is not quite that simple)!


Thankfully, however, the new rules will only apply to the amount of the gain that has arisen after 5 April 2015. There will be two alternative ways of evaluating this. One will be to establish the market value of the property on 5th April 2015 and to use that in place of the original cost in the tax calculation. The other is to take the gain for the whole period of ownership and then to apportion it on a time owned basis between the pre and post April 2015 periods.


It is unlikely that a non resident owner will be able to access the Principle Private Residence relief that enables UK residents to sell their own residences free of CGT. However, they will qualify for the CGT annual exemption (£11,100 in 2015/16). Tax will be payable at 18% or 28% depending on the individual’s other UK source income and gains.

Non residents will be required to notify HMRC within 30 days of the completion of the disposal of the property, that the disposal has taken place. This is regardless of whether a gain or loss has been made, or whether or not the gain is covered by the annual exemption. Those not already within the UK Self Assessment regime will need to pay any tax due at the same time.


Finance Act 2015, s37 and Schedule 7

Posted by Kevin Russell

Our Legal Eagle guru and Stewardship's Technical Director, Kevin constantly has his finger on the pulse of all things tax and charity law-related. His briefing papers for charities, churches and individuals are an invaluable resource on everything from VAT to Gift Aid. 


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