Do You Need to File a UK CGT Return as a Non-Resident?

If you have recently sold a property in the UK but live abroad, there’s a good chance you’ve wondered: do I need to file a Capital Gains Tax (CGT) return? The short answer is yes. In many cases, you do. And if you’re not careful, it could cost you.

Understanding non-resident Capital Gains Tax rules can feel a bit daunting. Here is what you should know.

What is non-resident Capital Gains Tax?

Capital Gains Tax is a tax you pay on the profit (or “gain”) you make when you sell something valuable like a property. In the past it mostly applied to people who lived in the UK full time. But that changed in April 2015, when the government extended CGT rules to include non-residents selling UK residential property.

In April 2019, the rules went even further. Now CGT can apply to:

• UK commercial property
• Indirect disposals like selling shares in companies that derive at least 75% of their value from UK land
• Any UK land or property used for development

If you are not living in the UK but you have made money from selling UK property or land, you probably need to report it.

Do all non-residents have to pay?

Not necessarily. Whether or not you actually owe tax depends on things like:

• The original purchase price and the selling price
• Whether the property was ever your main residence
• What kind of reliefs or allowances apply
• If you’ve made a loss on the sale

But, and this is the crucial bit, even if you do not owe any CGT, you may still need to file a return. HMRC requires most non-residents to report the sale within a strict timeframe, be it there is tax due or not.

What’s the deadline?

You have 60 days from the date of completion (not exchange) to report the disposal and pay any CGT owed.

This 60-day deadline was extended from the original 30-day rule in October 2021, giving sellers a bit more breathing room. But it still catches many people out, more so if they’re dealing with the sale from overseas or unfamiliar with UK tax law.

What if you miss the deadline?

HMRC is not shy about issuing penalties. If you miss the deadline, here is what you could be looking at:

• £100 initial late filing penalty
• Additional daily penalties if the return is still outstanding after 3 months
• Further penalties after 6 and 12 months
• Interest charged on any unpaid tax

And those penalties can apply even when there’s no CGT due, which is why it is important to file the return anyway.

How to file a non-resident CGT return

You will need to do it online through the Capital Gains Tax on UK Property account on the HMRC website. Here is a quick overview of the process:

1. Create an account – You will need to verify your identity and provide some basic information about yourself and the property.
2. Submit the details of the sale – That covers the date of acquisition, date of disposal, sale price and allowable costs (legal fees or estate agent commissions).
3. Calculate your gain – Or loss. If you’re not confident doing this yourself, it is best to get professional advice.
4. Pay any tax owed – This must be done within the 60-day window as well.

If you are already registered for UK Self Assessment, you may still need to file the separate CGT return. This process doesn’t wait for the usual tax year end.

Can you reduce the tax?

Yes. There are a few ways to reduce your CGT bill:

• Private Residence Relief: If the property was your main home at any point, you may qualify for some relief.
• Annual exemption: Non-residents get the same CGT allowance as UK residents (unless stated otherwise), which is currently £3,000 (for the 2024/25 tax year).
• Improvement costs: If you spent money improving the property, not just maintaining it, those costs can often be deducted from your gain.
• Losses: If you made a loss on the sale, you should still report it. You might be able to offset that against future gains.

Final thoughts

Selling a UK property while living overseas comes with more than mere logistical headaches. From a tax perspective, understand your responsibilities under the non-resident Capital Gains Tax rules.

Even if you do not owe any money, failing to submit your CGT return on time can invite fines and complications you would much rather avoid. The 60-day deadline is tight, and HMRC doesn’t hand out free passes for missing it.

After all no one wants a nasty surprise from the taxman months after a sale is done and dusted.