HomeInsightsTechnical updatesCapital Gains Tax On Residential Property For UK Citizens Living Abroad


Technical updates // 18/06/2014

Capital Gains Tax On Residential Property For UK Citizens Living Abroad

From April 2015, UK citizens who are living abroad will have to pay capital gains tax (CGT) on the sale of UK residential property. There are an estimated 4.5 million* Britons currently working, studying or retired abroad, many of whom still own property in the UK.

They can currently sell their property without paying CGT, but gains that arise after next April will be subject to tax at either 18% or 28%, depending on the owner’s level of income. The annual CGT exemption, currently £11,000, will be available to non-residents.

Capital gains tax legislation

Draft legislation is not yet available but the government has published a consultation paper. The key points are as follows:

  • The regulations will apply to individuals and companies that own property.
  • Principal private residence relief, which is broadly available to UK individuals on their main residence, will only be available to non-residents in limited circumstances.
  • Residential accommodation for students is specifically caught by the proposed rules, although it is proposed other communal accommodation such as boarding schools and nursing homes will not be.
  • All non-resident trusts will be subject to CGT in respect of UK residential property held.


Although non-residents investing in UK residential properties through a UK or foreign REIT (Real Estate Investment Trust) should not be subject to UK CGT. A further extension of the charge will be made in respect of other collective investment schemes.

The government will apply the charge through a new withholding tax applied at the point of sale of the property. The non-resident will have to pay the withholding tax, or the actual tax due, within 30 days of the sale. HMRC is currently proposing that solicitors, accountants and others involved in the sale should be responsible for identifying non-resident vendors and collecting the withholding tax.

The government has now introduced two separate regimes that could apply to non-resident companies holding UK residential property. The other being the annual tax on enveloped dwellings regime (ATED), which applies to residential property worth over £500,000 that is owned by a company. The government will have to confirm how the two regimes will interact, however, we expect that different rules, exemptions and reliefs will apply across them both.

For example, a non-resident company holding UK residential property as part of a genuine commercial investment would qualify for relief from the ATED rules, but would be subject to capital gains tax on a future disposal of the property.
The new legislation brings the UK into line with most other countries’ taxation of nonresidents holding property.

Print Friendly, PDF & Email

  • Revised FRS 102 Reduces Intangible Asset Recognition Requirements

    FRS 102 Revisions Revisions to FRS 102 arising from within the Financial Reporting Exposure Draft 67 (“FRED 67”) will see acquiring companies in business combinations being given the option to recognise fewer intangible assets than they had been required to previously. These revisions are being implemented by the Financial Reporting Council (“FRC”) in response to […]

    Print Friendly, PDF & Email
  • FRS-102 Technical Update – February 2018

    In March 2017 the FRC published FRED 67 which contained amendments to FRS 102. These were finalised on the 14 December 2017 and can now be early adopted. If a company chooses to early apply FRED 67 all amendments must be adopted. The effective date is for periods beginning on or after 1 January 2019. […]

    Print Friendly, PDF & Email
  • Introduction to IFRS 16 – Leases

    For accounting periods beginning on or after 1 January 2019 there is a new treatment of leases which you may need to be aware of. IFRS 16 removes the difference between operating and finance leases for accounting purposes, and as such they are all treated as if they are finance leases by recognising the asset […]

    Print Friendly, PDF & Email