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.
Senior Manager – Tax Compliance
46 Aldgate High Street
London EC3N 1AL
020 3780 0818