If you’ve ever sold UK property while living abroad, chances are you’ve heard of Capital Gains Tax (CGT). But how does it actually apply if you’re not a UK resident? Do you still need to pay tax? And what are the rules you need to follow?
In this article, we’ll unpack how non-resident Capital Gains Tax works, what counts as a “gain,” and what steps you need to take to stay on the right side of HMRC. Whether you’re an expat landlord or someone who’s moved overseas and sold up, here’s what you need to know.
What Is Capital Gains Tax (CGT)?
Capital Gains Tax is what you pay when you sell (or otherwise dispose of) something valuable—like a property—and make a profit. That profit, or “gain,” is what HMRC looks at, not the full sale amount.
So if you bought a flat in London for £250,000 and sold it for £400,000, the gain is £150,000. From that, you can deduct certain costs—legal fees, stamp duty, improvements to the property—and what’s left might be subject to CGT.
Do Non-Residents Have to Pay CGT?
Yes, and this is where things often catch people out. Before April 2015, non-residents didn’t usually have to pay CGT on UK property sales. But that changed with new legislation.
Now, if you’re a non-UK resident and you sell any UK land or property—including residential, commercial, or even land you inherited—you may have to pay non-resident Capital Gains Tax. It doesn’t matter if you live in Dubai, Sydney, or Kathmandu—if the asset is in the UK, HMRC still wants a look-in.
This rule applies whether you’re a British citizen living abroad or a foreign national.
When Do You Need to Report the Sale?
Timing is key. Non-residents must report the sale of UK property within 60 days of completion—even if you don’t owe any tax. This is a common mistake. People often assume if there’s no tax due, there’s nothing to report. But HMRC still expects a return.
If you miss the deadline, penalties can add up quickly. So, it’s best to file the report as soon as possible after the sale goes through.
You’ll need to create a CGT account on HMRC’s website and fill out the details of the transaction. If you’re not confident doing it yourself, a tax adviser can help you get it sorted without any fuss.
How Is the Tax Calculated?
When it comes to calculating non-resident Capital Gains Tax, HMRC typically uses the property’s value as of April 2015—when the rules first changed—as your starting point. So, any gain made from that date to the time you sell is what counts.
You’ll also be able to deduct allowable costs, just like UK residents. These might include estate agent fees, solicitor charges, and capital improvements.
Keep in mind that CGT rates for non-residents are usually the same as for residents—18% for basic-rate taxpayers and 28% for higher-rate ones when it comes to residential property.
What If You Move Back to the UK?
Things get even more interesting if you move back. HMRC has something called the “temporary non-residence” rule. If you return to the UK within five years of moving away, you might still owe CGT on gains made while abroad—especially if the asset was owned before you left.
In other words, moving overseas isn’t always a way to dodge tax. HMRC has its eyes on the fine print.
Final Thoughts
Selling UK property as a non-resident comes with a few extra hoops to jump through. But once you understand how non-resident Capital Gains Tax works, it’s much easier to stay compliant—and avoid any nasty surprises later on.
The key? Know your reporting deadlines, keep good records, and don’t be afraid to get professional help if things get complicated.
Taxes may not be the most exciting part of life abroad, but getting them right will definitely help you sleep better at night.
