Capital gains tax for non resident landlords

Residential property

If you dispose of a dwelling in the UK, you are liable to tax on the Capital Gain. If you owned the property at 5th April 2015 then the assessable gain is for the period from 5th April 2015 to the date of disposal.

Private Residence Relief may be available if you have lived in the property at any time and the annual exemption is available to set off against the gain. If you owned the property on 5th April 2015, you can either:

1. Claim the market value of the property at 5th April 2015 against the proceeds of the sale (the default position). The gain/loss is the difference between the sale proceeds (less costs) and the market value at 5th April 2015 (plus any enhancement expenditure after this date).If the property was your principal private residence at any time prior to 5th April 2015 then you can claim the last 9 months.

2. Elect to time apportion the gain over the total period of ownership and then the amount chargeable would be the portion which relates to after 5th April 2015.

3. Elect for the retrospective basis to apply which means that the whole gain/loss is taken into account. You may want to do this if there is a loss or principal private residence relief gives a lower gain over the whole period.

The elections in 2 and 3 are irrevocable once made.

Non-residential property (after 5th April 2019)

If you dispose of a commercial building, land or shares in a company where you own 25% or more of the shares and 75% or more of the company’s assets are land and/or buildings in the UK, you are liable to tax on the Capital Gain. If you owned the property at 5th April 2019 then the assessable gain is for the period from 5th April 2019 to the date of disposal.

You can either:

1. Claim the market value of the property at 5th April 2019 against the proceeds of the sale (the default position). The gain/loss is the difference between the sale proceeds (less costs) and the market value at 5th April 2019 (plus any enhancement expenditure after this date).
2. Elect for the retrospective basis to apply which means that the whole gain/loss is taken into account. You may want to do this if there is a loss but you could not claim the loss on the disposal of shares in a company.

In all cases

If you are non-resident for less than five whole tax years any capital gains which you make on any other assets (which are not dwellings sold after 5th April 2015, other immovable property sold after 5th April 2019 or assets used in a trade in the UK) whilst abroad, may be taxed in the year you return unless those assets were acquired and disposed of after you became non-resident.

Apart from dwellings sold after 5th April 2015, other immovable property sold after 5th April 2019 or assets used in a UK trade and you return to the UK after 5 tax years, there is no Capital Gains Tax if you are a non-resident.

YOU MUST MAKE A RETURN OF THE DISPOSAL OF LAND AND BUILDINGS AND PAY THE TAX WITHIN 60 DAYS OF THE DATE OF COMPLETION OF THE SALE. The return has to be made whether you complete a self-assessment return or not.

You should also confirm your tax reporting requirements in the country where you reside with a local tax adviser.

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