Non-resident capital gains tax: what you need to know

If you own property in the UK but do not live in the UK, you should make sure that you comply with non-resident capital gains tax (NRCGT) rules, including the changes that came in on 6 April 2020.

Since 6 April 2015, non-UK residents selling UK residential property have had to pay NRCGT on the proportion of the gain that relates to the period after 5 April 2015. On 6 April 2019, the scope of NRCGT increased to cover gains on direct and indirect disposals of all UK land and property (a direct disposal is selling the actual property, whereas an indirect disposal is, for example, selling shares in a company that owns UK property).

An NRCGT return must be submitted to HMRC within 30 days of the date of the disposal, and this applies regardless of whether you think there is any NRCGT payable or not.

The gain can be calculated by either establishing the value of the property as of 5 April 2015 or 2019 (‘rebasing’) and then working out the amount of gain over that value or by carrying out a ‘straight-line time apportionment’ of the gain over the period of ownership.

Once the gain has been calculated with the annual exemption and available reliefs deducted, the tax is calculated at a rate of 18% or 28% (as appropriate) on the excess (these rates are for residential property only). Any NRCGT due is payable within 30 days of the disposal.

If the residential property being disposed of was previously your main residence, then you may be entitled to principal private residence relief (PPR) on part of the gain.

However, a tax year while you are non-resident will only be eligible for PPR if you have spent at least 90 nights in that property for that year. Practically, this means there are few cases where a non-resident will be eligible for PPR.

In addition, new rules for landlords who once lived in their rental property came into force last month (April 2020). Previously, homeowners who previously lived in a property but went on to let it out could claim PPR relief on property sales for up to 18 months after they move out. As of 6 April 2020, the period has reduced to nine months. This will hit people who leave home for unplanned reasons before sale, such as lengthy hospital stays. If the owner or their spouse moves into a residential care-home or is disabled, the final deemed period of occupation remains at 36 months.

Lettings relief is currently very valuable; it can be worth up to £40,000 per owner when a landlord sells their former home after renting it out. However, from 6 April 2020, lettings relief will only be claimable where the owner is in shared occupation with a tenant.

If we can help you with any of this, please get in touch.

Our Legal 500-rated wills, trusts & probate team has the expertise to help you plan for the future and guide you through any difficult challenges that may arise, including those relating to non-resident capital gains.