Non Resident Capital Gains Tax Return

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Non-Resident Capital Gains Tax

Are you non-resident for UK tax purposes and own UK residential property? If so, did you know that if you sell your UK property you have an obligation to file a Non Resident Capital Gains Tax Return (NRCGTR) within 30 days of conveyance? This is the case even if you do not make a gain on the sale of the property or if any gain is fully covered by Private Residence Relief (PRR).

This article was written exclusively for Expat Network by Atcha and Associates, chartered tax advisers.

The NRCGTR is in addition to your regular self-assessment tax return and it’s not just a filing formality, with it you could face a CGT bill and if the 30 day deadline is missed, severe penalties can be imposed by HMRC. It is, therefore, important to make sure arrangements are put in place for this to be completed in good time.

Previously, if you were non-UK resident, you would be outside the scope of capital gains tax (subject to the temporary non-residence rules) but from 6 April 2015, the UK government changed legislation so that non-UK residents would be liable to UK CGT on the profit from the sale of UK residential property and created the need for this new tax return.

The good news is that only the gain from 6 April 2015 (or the date of purchase if this is later) will be taxable. The default method will calculate the gain by taking the proceeds from the sale and deducting the open market value of the property at 5 April 2015 (as well as any post 5 April 2015 enhancement expenditure and legal fees etc.). There are, however, a couple of other ways of calculating the gain so it is worth exploring what the best method for you is before finalising the return.

It is worth noting that if the property is owned jointly by non-UK residents, all parties will need to complete their own NRCGTR separately. In most cases, taxpayers will be able to utilise the Annual Exemption amount (AEA) (£11,300 for 2017/18) and if the property used to be your main home PRR could be available as well. If a gain does materialise above the AEA, tax will be payable at either 18% or 28% depending on whether or not you are a basic or higher rate tax payer. Any tax liability is in the first instance payable within 30 days of conveyance but if you are already registered for self-assessment you can elect to defer payment to the regular tax payment deadline (31 January after the tax year in question).

Atcha & Associates would be very happy to help with any NRCGTR queries you may have, file your NRCGTR or assist with any other tax matters that might affect you including the preparation of self-assessment tax returns, inheritance tax planning, HMRC dispute resolution, advising on the law of residence and domicile as well as general tax queries. Please contact us to find out more.

Tom Good

Senior Manager – Tax Compliance

tomgood@aatax.com

46 Aldgate High Street
London EC3N 1AL

020 3780 0818

Moving Abroad Checklist

Initial Considerations

Will your partner be travelling with you?

If so, what will they be giving up in your present home and will they be able to continue with their career in your new home? You will need to check whether a separate visa is required for your partner to work or if your visa gives that right. If they are unable to work you will need to decide on the effect on your finances and what alternatives are available to give a fulfilling life (home business, training, voluntary work).

Are you taking family with you?

Moving with family raises many exciting opportunities, but also can create challenges. The HSBC Expat Explorer survey indicates that expat kids can take six months to settle in to their new country (see article). Getting young or even older children to prepare to move and leave their friends and family behind can be a challenge and should be thought through.

The options for education is another area that needs to be thought through.

Moving your child to a new country with a different education system can be a great opportunity to broaden their experience, but if they are close to key exams the timing can make this inadvisable. If you do take your family with you, it is important to decide between joining the local school system or choosing an international school.

Where will you be living?

Whether you will be living in a house or apartment, furnished or unfurnished, these decisions will affect what you need to take with you. The time you are planning to live overseas will also affect whether you should leave your property at home empty, rent it out or sell it. See the article Sell, Store or Ship.