Selling a UK property while living abroad comes with specific tax obligations, and one of the most important is Capital Gains Tax (CGT). Many non-residents assume that their overseas status exempts them from UK tax reporting requirements. However, HMRC has clear rules in place that apply to non-residents selling UK property — and failing to follow them can lead to penalties.

Understanding these obligations is crucial for avoiding unexpected tax bills and fines. This article outlines what non-residents need to know when disposing of UK property.

Capital Gains Tax for Non-Residents

Since April 2015, non-resident individuals and entities have been subject to UK CGT on the sale of residential property. The scope expanded in April 2019 to include commercial properties and certain indirect disposals — for example, selling shares in a company that derives at least 75% of its value from UK property assets.

Regardless of where the seller resides or whether tax is being paid in another country, a UK CGT return is still required when disposing of UK land or property. This applies to individuals, partnerships, trusts, and companies alike.

Reporting Obligations and Deadlines

Even if no tax is due, non-residents are still required to report the sale of UK property to HMRC. This must be done within 60 days of the completion date of the sale. The report is submitted using HMRC’s online Capital Gains Tax on UK Property service.

Missing this deadline can result in a late filing penalty, which starts at £100 and increases depending on how late the return is submitted. Interest may also accrue if there is tax to be paid.

How the Gain Is Calculated

For non-residents, CGT is typically calculated using the property’s market value as at 6 April 2015 (for residential property) or 6 April 2019 (for commercial property) — a process known as rebasing. Sellers can choose to calculate their gain using either this rebased value or the original acquisition cost, whichever results in a lower tax liability.

Allowable costs can be deducted, including purchase and sale-related costs (such as solicitor and estate agent fees), and the cost of capital improvements made to the property. After deductions, the annual CGT exemption (currently £6,000 for individuals in 2024/25) can be applied. The resulting taxable gain is then subject to CGT at either 18% or 28%, depending on the seller’s UK income tax bracket. Companies pay Corporation Tax on gains instead.

Available Reliefs

Certain tax reliefs may apply, such as Private Residence Relief for properties that were used as a main home for qualifying periods. However, eligibility is subject to strict criteria, particularly for non-residents. Lettings Relief, once widely available, is now limited and rarely applicable to overseas landlords.

It is recommended that sellers seek professional advice to determine which reliefs, if any, they may be entitled to.

Indirect Disposals

The rules also apply to indirect disposals of UK property, such as the sale of shares in a company that owns UK real estate. These disposals are chargeable if the individual owns at least a 25% interest in the entity, or if they meet other substantial ownership criteria.

In these cases, the gain is calculated based on the portion of the value that can be attributed to UK property, and the same CGT reporting requirements apply.

Penalties and Consequences

Failure to report disposals within the 60-day window may result in automatic penalties and interest charges. These can apply even if there is no tax due on the disposal. Moreover, failing to report could lead to longer-term issues with HMRC compliance and additional scrutiny in the future.

As such, all non-residents disposing of UK land or property should familiarise themselves with their obligations well in advance of any sale.

Professional Guidance

Given the complexity of the rules and the potential for penalties, many non-residents choose to work with UK-based tax professionals or accountants who specialise in property taxation. These experts can assist with calculating gains, identifying available reliefs, and ensuring timely and accurate reporting.

Non-resident landlords and investors should also consider using a non-resident capital gains tax specialist if their sale involves complex ownership structures or if the property was held through a company or trust.

Conclusion

Selling UK property as a non-resident requires careful attention to Capital Gains Tax rules. Sellers must report any disposals within 60 days for non-resident capital gains tax, calculate gains accurately using the correct method, and pay any tax due promptly. Failure to comply with HMRC’s requirements can result in financial penalties, even when no tax is owed.

To avoid these issues, it is advisable to seek early advice and ensure that all transactions are properly documented and reported. For many, consulting a tax adviser familiar with non-resident capital gains tax matters provides peace of mind and helps avoid common pitfalls.