Non-UK residents - new CGT rules you need to know


Date: 30 April 2019

An accountant explains new tax rules for non-residents in the UK to a business client.New capital gains tax (CGT) rules have been introduced this tax year to create a more level playing field between people who live in the UK and people who don't.

CGT is a tax on the profit you make when you sell something. UK residents are liable to pay CGT in the UK on anything that they sell anywhere in the world, above a certain value, apart from their main home and their car.

Up until now, non-UK residents have only been liable for CGT on the sale of a home in the UK. However, as of April this has now changed, and non-UK residents are now liable for CGT on the sale of all UK land and property.

The government’s aim is to stop UK residents being disadvantaged by legislation which allows non-residents to enjoy tax breaks that they don’t.

The changes will bring the UK into line with a lot of other countries, which don't distinguish between residents and non-residents in this way, and are part of a complete rewrite of a significant portion of CGT legislation.

Shares in commercial property

The new rules also cover the sale of shares in a company that owns commercial property in the UK. If 75% or more of the company’s value lies in UK commercial property, and you own 25% or more of the company’s shares, or have done during the previous five years, you'll be liable for CGT on the sale of those shares.

This won’t apply if the property that the company owns is used all or mostly for trading - for example, retail or hospitality businesses. The tax treaty with the seller’s country of residence must also give the UK the right to levy this tax.

If a sale involves more than one company, it will be necessary to establish whether, overall, 75% of the companies' value lies in UK property, which can be complicated.

When an asset becomes taxable under the new rules for the first time, it is possible for the tax to be based on its value in April 2019, so that only the profit made since then is taxable. You can choose not to do this if the asset has lost value.

Tighter payment deadlines

One final change is that from April 2020 you will no longer be able to pay CGT through your self-assessment tax return. You will have to pay it within 30 days of the sale.

Tax accountants and financial advisors Charter Tax, based in London and Kent, noted, “These changes are likely to mean the UK collects a lot more tax - and that a fair number of non-residents, non-doms and expats will now pay tax in the UK where they didn't before.”

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