UK Resident Selling Property in France

When a UK resident ventures to sell a property situated in France, they are met with a plethora of tax implications to navigate. This article provides a comprehensive exploration of the tax dynamics and the requisite reporting responsibilities tied to such a transaction.

1. Reporting to HMRC: Is it Necessary?

When you are a UK resident and domiciled individual, your global financial impact, including property sales in foreign countries like France, are subject to scrutiny by the HMRC. Here is what you need to know:

The Self-Assessment Tax Return: This is the mechanism by which you report your French property sale. The sale and any subsequent gains must be declared to HMRC using this form.

Double Taxation Treaty: The UK and France have in place a Double Taxation Treaty which ensures that your income or gains are not taxed in both countries. In simple terms, if you have paid a specific CGT in France, this amount will be credited against any CGT you owe in the UK.

2. Dissecting Capital Gains Tax (CGT) in France and the UK:

Capital Gains Tax is a crucial component of property sales. But how is it determined in both nations?

French CGT for Non-Residents:

Tax Rate: EU or EEA residents are typically taxed at 19%. For those outside the EU/EEA bracket, a rate of 24% applies.

Calculation: Start with the sale price of the property and subtract the purchase price. From this gain, deduct any eligible costs. These could range from legal fees to substantial property improvement expenses.

Special Exemption: As of 2015, residents of certain EU or EEA countries could potentially be exempted from CGT if they sell their primary residence. However, post-Brexit, UK residents might not enjoy this perk.

UK’s Approach to CGT:

Tax Rate: Depending on your income bracket, you could either be charged an 18% or a 28% rate.

Calculation: Like in France, begin with the sale price and subtract the purchase price. Also, deduct any expenses tied to the property’s purchase, sale, or enhancement such as legal fees. stamp duty or estate agent fees.

Higher Rate Implication: Gains taxed at the elevated 28% rate might lead to additional UK CGT dues.

For a deep dive into UK CGT, consider exploring resources like the UK Landlord Tax Guide on Capital Gains Tax :- 

How to work out your capital gains tax – UK Landlord Tax

3. Reporting Obligations and Disclosure Nuances:

Global Capital Gains Reporting: Your French property sale is part of your global capital gains as a UK resident, and as such, it must be reported to HMRC.

The 60-Day Rule and Exceptions: Generally, certain gains require disclosure to HMRC within a 60-day window. However, sales of properties in France are exempt from this rule. Instead, the sale must be reported via your annual UK self-assessment tax return.

In conclusion, navigating the tax landscape when selling foreign properties as a UK resident can be intricate and complicated. It is advisable to consult with tax professionals in both countries to ensure full compliance and to optimise your tax reliefs.

If any readers have any additional tax queries please reach out to the team at UK Landlord Tax on 01902 711370 or email enquiries@uklandlordtax.co.uk

If you found this article informative why not read more about CGT & divorce or non-residence inheritance tax next?

Thandi Nicholls Ltd
Creative Industries Centre
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Wolverhampton
West Midlands
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