People who are not UK resident pay UK capital gains tax when they sell or give away UK property: residential property since 6 April 2015, and all UK property, including commercial buildings, farmland and shares in UK property rich companies, since 6 April 2019. Gains are normally measured only from the date the charge started, using a rebased value at 5 April 2015 or 5 April 2019, and every disposal must be reported to HMRC within 60 days of completion, even if there is no tax to pay. Non resident companies pay corporation tax on these gains instead.

Who is caught by the charge?

The charge on individuals comes from section 1A(3) of the Taxation of Chargeable Gains Act 1992 and applies to companies through section 2B. HMRC helpsheet HS307 lists those within the capital gains tax charge as:

  • non resident individuals;
  • UK resident individuals selling in the overseas part of a split year;
  • personal representatives of a non resident who has died;
  • non residents who are members of a partnership;
  • non resident trustees.

From 6 April 2019 non resident companies, including collective investment vehicles treated as companies, pay corporation tax on UK property gains rather than capital gains tax. They report on a company tax return and must register for corporation tax if they do not already file one. Rental income is a separate matter covered by the non resident landlord scheme.

What kinds of disposal are taxed?

GOV.UK splits the charge into direct and indirect disposals.

A direct disposal is a sale or gift of your own interest in UK property. Residential property means a building used or suitable for use as a dwelling, one being built or adapted as a dwelling, its garden or grounds, and an off plan right to acquire a UK dwelling. Non residential property includes shops, offices, agricultural property, forests and anything not suitable as a residence. Mixed use property, such as a flat above a shop, is split between the two.

An indirect disposal is a disposal of an interest in an entity that derives 75% or more of its gross asset value from UK property, where you hold at least a 25% interest. CG73934 explains the property richness test uses gross market values at the date of disposal, with no deduction for liabilities. CG73936 adds that the 25% test looks at any point in the two years before the disposal, and counts interests held by a spouse or civil partner, ancestors and descendants. Holding 25% or more for only an insignificant part of that period, which HMRC generally treats as 10% or less of the time, does not count. There is an exemption where the UK property is used in a trade that is continuing.

How is the gain worked out?

The default method rebases the cost to the market value on the date the charge began, so growth before then is not taxed. The GOV.UK guidance on working out the gain sets out the options:

Type of disposal, asset held before the start date Default method Alternatives
Direct disposal of UK residential property Market value at 5 April 2015 Straight line time apportionment of the whole gain; or the gain over the whole period of ownership
Direct disposal of non residential property Market value at 5 April 2019 Gain over the whole period of ownership
Indirect disposal Market value at 5 April 2019 Gain over the whole period, but a loss produced by this method is not allowable

With rebasing, only improvement costs incurred from the rebasing date can be deducted, plus the costs of selling. Under time apportionment, the gain over the whole ownership period is multiplied by the period of ownership after 5 April 2015 over the total period of ownership. The whole period method usually only helps where the property has fallen in value overall and you want to establish a loss. For mixed use property, the residential part is rebased to 2015 and the non residential part to 2019.

Valuations are your responsibility. You do not need to have obtained one at the time, but GOV.UK suggests recording the condition and any unusual features of the property. HMRC will check a valuation on form CG34 after the disposal, which takes at least 3 months.

Worked example

Illustration only. Marco, who lives in Italy, bought a London flat in 2010 for £300,000 and has never lived in it. It was worth £450,000 on 5 April 2015. He spent £20,000 on a new kitchen in 2018 and sells in July 2026 for £540,000, paying £10,000 in fees.

  • Rebasing method: £540,000 less £10,000 fees, less £450,000 value at 5 April 2015, less £20,000 kitchen, gives a gain of £60,000.
  • Whole period method: £540,000 less £10,000, less £300,000, less £20,000 gives £210,000, so not worth choosing here.

Marco deducts the £3,000 annual exempt amount for 2026 to 2027. GOV.UK explains that the rate depends on his taxable UK income added to the gain: within the £37,700 basic rate band the rate is 18%, and above it 24%. With no UK income, £37,700 of the £57,000 is taxed at 18% and £19,300 at 24%. He must report and pay within 60 days of completion.

When and how must the disposal be reported?

A non resident must report every disposal of UK property, even with no tax to pay, a loss, or Self Assessment registration. Reports go through an online Capital Gains Tax on UK property account, or a paper form if online reporting is not possible. HMRC then issues a payment reference beginning with X. For completions on or after 27 October 2021 the deadline for reporting and paying is 60 days from completion; late filing and late payment can lead to penalties and interest. Our guide to the 60 day property return covers the mechanics, which are the same as for UK residents.

If you already file a Self Assessment return, you must also include the disposal on the capital gains pages for that year, quoting the property return reference (HS307). Agents need to be authorised through the client’s property account. Trustees of non resident trusts must register the trust with HMRC before reporting. Jointly owned property is reported separately by each owner for their own share.

Can losses and reliefs reduce the gain?

Losses on UK property disposals by a non resident are ring fenced. They must be set against gains on other UK property in the same year, and unused losses carry forward only against future UK property gains (HS307). Losses on other assets, such as shares, cannot be used, even if they arose while you were UK resident. If you later become UK resident, unused UK property losses become general losses.

Private residence relief is available but restricted. Under sections 222B and 222C, a tax year counts as one of residence only if you or your spouse were resident in the country where the property is, or you spent at least 90 days in the property, or in other qualifying UK houses, during that tax year. A non resident who used a UK flat for a few weeks a year will usually find those years do not qualify.

Double taxation treaties can sometimes remove the UK charge. Where a treaty exempts the gain, GOV.UK says you still need to file the relevant UK return to claim treaty relief.

What if you return to the UK within five years?

If you were non resident for five years or less, the temporary non residence rules can tax, in the year you return, the part of a gain that the non resident charge did not reach, such as growth before the rebasing date. If those rules do not apply, there is no extra UK charge on return (HS307).

Common mistakes

  • Not reporting because there is no tax due or a loss arose. The obligation to report applies regardless.
  • Missing the 60 day deadline because the seller lives abroad and the conveyancer did not mention it.
  • Deducting improvements made before the rebasing date when using the rebased value.
  • Forgetting indirect disposals: selling 25% or more of a company whose value is mainly UK property is within the charge.
  • Assuming private residence relief applies in full without checking the 90 day test year by year.
  • Applying the individual loss ring fence to a non resident company. Companies follow the corporation tax loss rules instead, including the corporate capital loss restriction (CG73920).

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.