Non-resident capital gains tax

Selling a residential property in the UK is complex at the best of times. If you are living abroad when the sale happens, the position shifts significantly. Working through the capital gains tax regime for non-residents takes a precise understanding of HMRC’s reporting windows, the valuation methods available, and the reliefs you can claim.

If you are a non-resident individual disposing of UK residential property, you are within the scope of UK capital gains tax. It is important to recognise that the rules for non-residents differ from those for UK residents, particularly on the speed of reporting and on how the taxable gain is worked out.

We often help clients who are surprised to learn that even where a sale produces no profit, or an outright loss, a formal filing is still required.

The 60 day compliance window

The most critical point when selling UK residential property as a non-resident is the reporting timeline. Unlike most taxes, which are handled through the annual self assessment return, capital gains tax on UK property disposals runs to a much tighter schedule.

You must file a capital gains tax return and settle any tax due within 60 days of completion of the sale.

●       Reporting is mandatory.  A return is required whether or not a gain has been made. Even where the disposal produces a nil gain or a capital loss, the report must be submitted.

●       Payment runs to the same clock.  Any tax must reach HMRC within the same 60 day window. Missing it triggers interest and late payment penalties.

●       It is standalone.  Even if you are already registered for self assessment, you must still complete this separate return through the Property Reporting Service within 60 days.

⚠️ WARNING  The 60 days runs from completion, not from exchange of contracts. Those two dates can be weeks or months apart, and assuming the clock starts at exchange is a common way to lose time you cannot recover.

To file the return you first need to create a capital gains tax account with HMRC

Rates and allowances

Before working through the calculation, it helps to know what the gain will actually cost.

Image 1 — rates, allowance and the deadline

For 2026/27 the annual exempt amount is £3,000. Residential property gains are taxed at 18% to the extent they fall within your remaining basic rate band, and at 24% above it. As a non-resident you are still entitled to the annual exempt amount.

Rebasing and the April 2015 rule

A significant benefit for non-residents is the ability to rebase the value of the property. Rebasing means you generally pay tax only on the growth in value from April 2015 to the date of sale, rather than over the whole period you owned it.

If you owned the property before that date, there are three ways to calculate the gain.

Image 2 — the three calculation bases

●       Default rebasing.  The gain is calculated using the market value at 6 April 2015.

●       Time apportionment.  The gain is calculated over the whole period of ownership and then pro-rated for the period after 6 April 2015.

●       Whole gain, or retrospective basis.  The gain is calculated over the whole period of ownership from original acquisition, without rebasing. This is usually elected where the whole period produces a loss you want to crystallise, though it can occasionally give the better answer in other circumstances.

There is a vital caveat relating to the temporary non-residence rules. If you leave the UK and return within five years, the portion of the gain that accrued before April 2015, which rebasing had taken out of charge, becomes taxable in the year you come back.

Private residence relief

Private residence relief can reduce or eliminate the tax where the property was your only or main residence.

If you lived in the property as your main home before moving abroad, those years of physical occupation will typically qualify for relief.

In addition, where the home was your main residence and you physically occupied it at some point during ownership, the final nine months of ownership qualify automatically, whether or not you were living there.

Deductible costs

When calculating the taxable gain you can deduct certain costs. These fall into acquisition costs, disposal costs and capital enhancements.

●       Incidental acquisition costs.  If you are not rebasing, you can deduct professional fees such as solicitor and estate agent fees, and the Stamp Duty Land Tax paid at the time of purchase.

●       Incidental sale costs.  Estate agent fees, legal fees on the conveyance, and advertising costs associated with the sale.

●       Capital enhancements.  The cost of significant improvements made from April 2015 onwards. These must be capital in nature, such as an extension or a full renovation, rather than revenue repairs like general maintenance or redecorating.

Keep clear records and invoices for all of these. HMRC may ask for evidence during the 60 day reporting process, or in a later enquiry.

Mitigating double taxation

A common concern for expats and digital nomads is being taxed twice on the same gain, once in the UK and once where they now live. If you are tax resident in another country, you may be within its capital gains rules on your worldwide assets.

For property, the responsibility for relieving the double charge sits with your country of residence. In practice that means:

●       You report and pay the capital gains tax to HMRC in the UK first.

●       You then report the gain on your local return in your country of residence.

●       That country should give a foreign tax credit for the tax already paid to HMRC, reducing your local bill accordingly.

A note on scope

This article deals with UK residential property, which is the most common situation. The non-resident capital gains rules also extend to non-residential UK land, and to indirect disposals of interests in UK property-rich entities, with different rebasing dates applying. If your disposal falls into either of those categories the principles are similar but the detail differs.

Act as soon as an offer is accepted

Rebasing, private residence relief and foreign tax credits together create a position with a lot of moving parts. Because HMRC requires the full report and the payment within 60 days of completion, there is very little room for delay.

To get a compliant and efficient result, start as soon as an offer is accepted. Waiting until after completion to gather valuations or work out enhancement costs leads to rushed filings and reliefs that get missed.