Selling your home in the UK: Could Capital Gains Tax apply to your sale?

By Sarah Kent, Conveyancing Assistant

Are you a non-UK resident? Did you know that your status might affect the way you are taxed on the sale of a property? If you are thinking of selling your home, it is important to consider whether any gains from your property transaction may be subject to Capital Gains Tax.

Since the rules came into effect on 6 April 2015, any non-residents of the UK disposing of property are subject to Capital Gains Tax on gains accruing on the sale (including gifts) of an interest in a residential property in the UK. There is no ‘de minimis’ gain – this means there is no financial threshold i.e. the gain/loss could be £25 or £25,000 and will still be reportable to HMRC.

If you are selling your home, it is always a good idea to get advice from a lawyer who specialises in dealing with property transactions. They can advise you on your sale and ensure that the transaction proceeds as smoothly and quickly as possible. If necessary, they will direct you to seek independent tax advice.

Below is some more information about the rules around Capital Gains Tax for non-UK residents which you might find useful if you are thinking of selling a property in the UK.

Non-residents of the UK are defined as:

  • non-resident individuals i.e. those that do not reside in the United Kingdom
  • trustees of a non-resident trust
  • Personal Representatives of a non-resident individual
  • Non-resident companies

A UK residential property interest is an ‘interest in UK land’ which either:

  • has consisted of or included a ‘dwelling’ at any time in the period between the date of acquisition (or 6 April 2015 if later) and the date of disposal (termed the ‘relevant ownership period’ in the legislation)
  • has been acquired off-plan (i.e. the dwelling was purchased prior to construction or before it has been adapted for use as a dwelling)

A dwelling is:

  • a building or part of a building which is used or is suitable for use as a dwelling
  • a building or part of a building which is in the process of being constructed or adapted for such use
  • land which is or is intended to be occupied or enjoyed as garden or grounds of a dwelling at any time during the ownership period
  • also includes sale/grant of freeholds/leaseholds; grant of options to dispose of such property

Exemptions:

  • care homes, children’s homes, student accommodation, prisons, hotels, land without housing
  • where there is a change of use, only the residential use element is subject to NRCGT (Non Resident Capital Gains Tax)
  • where a property is not habitable due to accidental damage, an exemption may be available

As a non-UK resident, if your property transaction meets the above criteria then you will need to complete an online assessment within 30 days of the completion date, otherwise penalty charges will apply. HMRC will then notify you of any payment due in respect of Capital Gains Tax. 

Switalskis Conveyancing team has experience in assisting clients who are non-UK residents, so if you need expert advice on a property transaction, whatever the circumstances, please call us for a free no-obligation quote.

Disclaimer: The contents of this article are for the purposes of general awareness only.  They do not purport to constitute legal or professional advice, and the law may have changed since this article was published.  Readers should not act on the basis of the information included and should take appropriate professional advice on their own particular circumstances.