Non-UK residents who dispose of a UK residential property are within the CGT regime and have 30 days to file a return and notify HMRC of the disposal. The disposal date is usually the date of exchange of the contracts, and a disposal can include gift to a family member etc.
These rules apply to non-resident individuals and trustees, personal representatives of non-resident deceased persons and non-resident companies (those controlled by 5 or fewer persons).
The non-UK resident CGT regime has been in place since 2015, but penalties are still being incurred for late filed returns.
Non-UK resident individuals are subject to CGT at the same rates as UK residents for the sale of UK residential property. The rates of tax are 18% and 28%, the rate applied is dependent on the level of their UK income. There is also entitlement to the CGT annual exemption which is £11,700 for the 2018/19 tax year. Main residence relief may be available and lettings relief may be offset against any gain if the property has been used as a main residence at some point.
Capital gains tax is due on the proportion of the gain which relates to the period post 6 April 2015. The default position is that the property is revalued at 6 April 2015 and this becomes the cost value. Or the taxpayer can elect for the gain to be taxed on just the period of ownership post 6 April 2015 or alternatively on the entire period of ownership. It is advisable to perform a comparison exercise of the three methods of computation and the CGT due.
The gain calculated then needs to be reported to HMRC within 30 days of exchange of contracts and any CGT due needs to be paid within 30 days of the completion date. The payment of the CGT can be delayed if the individual is within UK self assessment reporting i.e. already files UK tax returns. All disposals need to be entered on a NRCGT return regardless of whether there is a CGT liability or a loss. For non-UK residents UK losses are ring fenced against future gains on the sale of UK residential property.
If you have any questions about what you need to do if you are not resident in the UK and are disposing of your UK residential property please contact us.