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Non UK Resident Disposing of UK Residential Property

david windram

With Brexit looming in less than a year, the temptation for some may be to fly off into the sunset, leaving behind all ties with the United Kingdom, however be warned, not all ties can easily be cut!

Previously, non UK resident individuals were not subject to UK Capital Gains Tax (CGT) on the sale of any UK assets. However, in order to combat the potential for individuals who were considering selling properties with potentially large CGT bills becoming temporarily non-resident, thereby avoiding CGT in the year of sale, the government introduced legislation to crack down on this. 

From 6 April 2015 any residential property sold in the UK by a non UK resident individual must be reported to HM Revenue & Customs on a specific non-resident return, reporting the gain/loss position. 

Calculating Capital Gains Tax

There are 3 ways to calculate your gain or loss:

  • using the market value at 5 April 2015
  • by working out the gain over the whole period (the date the property was acquired to the date it was disposed of) and then working out what the gain since 5 April 2015 is as a proportion - known as time apportionment
  • by working out the gain over the whole period

You can choose whichever method is the most beneficially.

You will also be entitled to an annual CGT exemption, currently £11,700 in the year to 5 April 2019.  Any chargeable gain over and above the annual CGT exemption is taxable at either 18% or 28% depending on an individual’s level of income.

Reporting Requirements for a Non UK Resident Individual

A significant difference for a non UK resident disposing of UK residential property is the tight timescale for reporting the disposal. 

Although non-resident individuals may also complete a UK tax return, any disposal of UK residential property must be reported on a Non Resident Capital Gains Tax (NRCGT) Return.  The filing deadline for the NRCGT Return is only 30 days from the date of the exchange of contracts, therefore providing a very tight turn around. 

This timescale is something to be wary of as the late filing penalties can be particularly severe.

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At Murray Beith Murray, we are more than just tax practitioners - we are trusted advisors. We are dedicated to helping our clients solve problems and preserve their wealth. Our highly personal service reflects our culture, which is centred on integrity, trust and expertise, and the guidance we provide has been designed to be an investment, not an expense.

Should you require any advice or assistance with a personal tax tax matter, please contact Laura Brown, Head of Tax on 0131 225 1200

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