Since 6 April 2015, UK tax non-residents have generally been subject to UK Capital Gains Tax on direct and indirect disposals of UK land and property.
Non-residents must also file a Capital Gains Tax on UK Property return within 60 days of completion. This is required in all cases even if the disposal results in a loss or if no UK tax is payable.
As the rules were introduced on 6 April 2015, relief is available under grandfathering provisions if the property was purchased before 6 April 2015.
Tax relief may also be available under Private Residence Relief if the property served as your main residence at any time during the period of ownership.
This article covers the NRCGT rules, exemptions for properties purchased before 6 April 2015, and the reporting requirements.
We recommend that professional advice is obtained to assess your UK tax residence status and calculate the gain reportable on your Capital Gains Tax on UK Property return. If you would like to discuss further, please contact Expat Tax Solutions.
Non-resident UK property CGT – At A Glance
- UK non-residents are generally liable to CGT on UK property gains.
- The disposal must generally be reported to HMRC within 60 days of completion.
- The rules apply even where there is no tax to pay or a loss arises.
- Properties acquired before 6 April 2015 may qualify for special calculation methods.
- Private Residence Relief may reduce or eliminate the taxable gain.
- The Annual Exempt Amount is £3,000 for 2026/27.
- Residential property gains are generally taxed at 18% or 24%, depending on the taxpayer’s available basic-rate band.
Who Does Non-Resident Capital Gains Tax Apply To?
Since 6 April 2015, UK tax non-residents are subject to NRCGT on disposals of UK land and property.
UK tax residence is determined under the Statutory Residence Test and NRCGT applies to individuals who dispose of UK land or property while full year non-resident or in the overseas part of a split year.
The date of disposal is typically the date on which contracts are exchanged as this is the date that the binding contract is made. There are exceptions where the contract is conditional or otherwise does not create an unconditional contract.
It is therefore important to assess your UK tax residence status to determine the exact date you become UK tax non-resident and whether a UK property disposal falls within the scope of NRCGT.
Example
- Contracts exchanged: 20 March 2027
- Completion: 30 April 2027
- Seller becomes UK non-resident on: 6 April 2027
As the contracts were exchanged in the 2026/27 UK tax year when the individual was UK tax resident, the sale is not subject to NRCGT even though the individual was UK tax non-resident at the date of completion.
If the disposal takes place while the individual is UK tax resident, it will still fall within the scope of UK capital gains tax however a different set of rules and reporting requirements will apply.
How Is Non-Resident Capital Gains Tax Calculated?
To calculate the NRCGT we must first calculate the chargeable gain. This is calculated as total proceeds received minus the base cost and any other allowable costs and deductions.
The base cost of the property is the amount that you acquired it for. This is typically the amount initially paid for the property however the base cost for inherited properties is the probate value.
We can then deduct allowable costs related to the purchase and acquisition of the property including legal fees, stamp duty, estate agent fees, survey costs and capital improvements made to the property during the period of ownership.
Costs that are not directly related to the disposal/acquisition or costs that are revenue expenditure rather than capital expenditure are not deductible. These include mortgage interest, repairs and maintenance on the property, council tax, insurance etc.
Example
Sarah is non-UK resident in 2026/27 when she sells a UK residential property. She purchased the property for £350,000 and later sells it for £600,000.
Her allowable costs are:
- Purchase price: £350,000
- SDLT on purchase: £12,500
- Legal fees on purchase: £2,500
- Qualifying extension and other capital improvements: £40,000
- Estate agent fees on sale: £9,000
- Legal fees on sale: £2,000
The CGT calculation is therefore:
In the absence of any reliefs (discussed below), this gain is chargeable to UK capital gains tax.
The Annual Exemption can be deducted from the gain before calculating the UK tax payable. Individuals receive the Annual Exemption once per tax year and therefore if you have other gains during the year, they should all be considered before the Annual Exemption is applied. The Annual Exemption for 2026/27 is £3,000.
The UK NRCGT is calculated based on how much UK taxable income you receive during the year. If the amount of the gain is within your remaining basic rate tax band, the NRCGT is calculated at 18%. For any amount of the gain that exceeds your remaining basic rate band, the NRCGT is calculated at 24%.
Continuing the example above, assuming Sarah has no UK taxable income in 2026/27, her NRCGT calculation is as follows:
How is NRCGT Calculated for Property Bought Before 6 April 2015?
As the NRCGT rules were introduced on 6 April 2015, grandfathering provisions apply to properties purchased before this date.
For residential property, there are three methods for calculating the gain attributable to the period after 5 April 2015. The taxpayer can generally use the method that produces the most favourable result.
The three calculation methods are:
Whole Period Calculation
This method is similar to the example provided above. No apportionment is used with reference to the 6 April 2015 introduction of NRCGT and the full gain over the entire period of ownership is considered.
This basis can be particularly beneficial where the property has been sold at a loss, as the resulting loss may be available to offset against other chargeable gains.
Time Apportioned Calculation
This method calculates the taxable amount by apportioning the full gain based on the period of ownership after 6 April 2015. This ensures that only the gain arising after 6 April 2015 is taxable and calculates the taxable portion on a straight line basis.
Example
Continuing the above example, assume:
- Purchase date: 1 January 2011
- Sale date: 1 June 2026
- Total gain before the annual exemption: £184,000
We then calculate the length of the total ownership period and length of ownership period after 6 April 2015.
Total ownership period: 1 January 2011 – 1 June 2026 = 5,630 days
Post-5 April 2015 period: 6 April 2015 – 1 June 2026 = 4,074 days
The taxable gain is therefore £184,000 x 4,074 / 5,630 = £133,147
This is before the Annual Exemption or any other reliefs for periods when the property was Sarah’s main residence.
5 April 2015 Rebasing Calculation
The final method allows you to use the value of the property at 5 April 2015 as the base cost rather than the amount paid. This ensures that only the gain arising after 6 April 2015 is taxable but calculates the taxable portion using an estimate of the property value when the new rules were introduced.
Under this basis, only enhancement expenditure incurred after 5 April 2015 can be deducted.
Example
Continuing the example above and assuming Sarah’s property was valued at £450,000 on 5 April 2015, the gain calculation is:
How Does Private Residence Relief Work for Non-Residents?
Private Residence Relief (PRR) is the relief that exempts the portion of the gain on UK residential property during periods that it served as the taxpayer’s primary residence. For example, when an individual owns and occupies the property as their sole residence throughout the entire period of ownership, the full gain will usually be exempt.
Non-residents typically have periods of absence from their UK property in which case their entitlement to PRR should be assessed. It should also be highlighted that even if the gain is wholly exempt under PRR, non-residents will still be required to file a Capital Gains Tax on UK Property return within 60 days of completion.
Private Residence Relief While Non-Resident
For a non-resident, a tax year will generally only qualify for Private Residence Relief under the 90-day rule if the individual, their spouse or civil partner spends at least 90 days in the property during that tax year.
If the property was only owned for a portion of the tax year, the 90 day threshold is pro-rated accordingly based on how long the property was owned during the tax year.
Spending fewer than 90 days in the UK property does not mean that PRR is not available as the period may qualify for PRR under the ‘deemed occupation’ rules below.
The PRR Deemed Occupation Rules
Periods of absence from an individual’s main residence may qualify for PRR under the deemed occupation rules if the period was both preceded and followed by a period of actual occupation.
The length of time that PRR is available under deemed occupation depends on the reason for absence and whether the relevant conditions are met.
It is essential that the period of absence is both preceded and followed by a period of actual occupation.
If you move abroad, spend fewer than 90 days in the property while non-resident, and sell the property while abroad, it is unlikely that the period of absence will qualify for PRR and a UK taxable gain may therefore arise.
The PRR Nine Month Rule
If the property has qualified as your only or main residence, the final nine months of ownership will generally qualify for PRR, subject to the relevant conditions. This is the case irrespective of your residence status during those nine months and whether you reoccupied the property.
As such, if you occupy the property as your main residence until you become non-resident and then sell the property within nine months, you can expect the property to be fully exempt under PRR.
This exemption does not remove the requirement to file a Capital Gains Tax on UK Property return
How and When Do You Report NRCGT?
If you dispose of UK land or property while UK tax non-resident, you must file a Capital Gains Tax on UK Property return within 60 days of completion. If there is any tax to pay then this must also be paid within 60 days of completion.
This is required in all cases even if the gain is wholly exempt or the disposal results in a loss.
The 60-day deadline applies even if you are already registered for Self Assessment.
To do this you must first set up an online Capital Gains Tax on UK property account. You can then share authorisation details with your agent who can prepare and submit the return on your behalf.
The return must include a calculation of the gain and any reliefs available under the non-resident CGT rules or PRR.
If you are within UK self-assessment, you should also declare the gain on your self-assessment return and should include the reference number provided when your Capital Gains Tax on UK Property return is submitted. Any tax paid alongside submission of your return will also be included on your self-assessment tax return and offset against your total UK tax liability.
What Happens If You Miss the NRCGT Deadline?
Late Filing Penalties
The late filing penalties broadly follow the Self Assessment penalty regime:
For example, a Capital Gains Tax on UK Property return that is one year late with no tax to pay will incur £1,600 of late filing penalties.
Late Payment Penalties
HMRC will also levy late payment penalties if any tax is not paid within 60 days of completion. The calculation of the penalty is:
Non-Resident Capital Gains Tax on UK Property FAQs
What is UK Non-Resident Capital Gains Tax (NRCGT)?
UK Non-Resident Capital Gains Tax (NRCGT) was introduced on 6 April 2015 and applies to disposals of UK land and property by individuals who are non-UK resident, subject to the relevant rules and exemptions.
Am I a UK tax non-resident?
Your UK tax residence status is determined by the Statutory Residence Test, which considers factors including the number of days you spend in the UK and your connections with the UK, such as your home and family.
Your UK tax residence should be assessed every tax year to determine your UK tax obligations.
Do I need to report the sale of my UK property to HMRC?
If you sell UK property while UK tax non-resident, you generally need to report the disposal to HMRC within 60 days of completion. Failure to report on time can result in late filing penalties and potentially late payment penalties.
Do I need to report the sale if I have no Capital Gains Tax to pay?
Yes. A non-resident generally needs to report the disposal even if the gain is wholly exempt, there is no Capital Gains Tax to pay, or the disposal results in a loss.
The fact that there is no tax to pay does not remove the reporting obligation or automatically provide a reasonable excuse for late filing.
What is the deadline for reporting an NRCGT disposal?
For disposals subject to the 60-day reporting regime, the NRCGT return must generally be filed within 60 days of completion of the sale.
Is the sale of my UK property exempt from Capital Gains Tax?
Potentially. Private Residence Relief may exempt some or all of the gain if the property has been your only or main residence. Other rules may also affect the amount of the gain subject to UK Capital Gains Tax, including the rules applying to disposals of property acquired before 6 April 2015.
What is Private Residence Relief (PRR)?
Private Residence Relief (PRR) is a UK tax relief that can exempt some or all of the gain arising when you dispose of a property that has been your only or main residence.
PRR can also apply to certain periods of deemed occupation when you are absent from the property, as well as to the final nine months of ownership, although specific conditions and restrictions apply. For non-UK residents, additional restrictions can apply where the 90-day test is not met.
What are the penalties for late filing of an NRCGT return?
The late filing penalty regime for NRCGT returns broadly follows the penalties that apply to Self Assessment tax returns. These include:
- £100 immediate late filing penalty
- £10 per day, up to £900, where the return remains outstanding for more than 3 months
- A minimum of £300 where the return remains outstanding for more than 6 months
- A further minimum of £300 where the return remains outstanding for more than 12 months
The penalties are cumulative, meaning that a return that is more than 12 months late can result in a minimum of £1,600 in late filing penalties.