Capital Gains Tax for UK Non-Residents: What You Need to Know

Overview

The UK's capital gains tax rules for non-residents have expanded substantially over the past decade. Whereas non-UK residents were once almost entirely exempt from UK CGT on UK investments, successive legislative changes have progressively brought UK property — residential and commercial — within the scope of CGT for non-residents. Understanding the current rules is essential for any internationally mobile individual with UK property or business interests.

This guide covers the UK CGT obligations of non-UK residents, the temporary non-residence rules, and the planning considerations for individuals who are currently non-resident or who are considering leaving the UK.

This guide is for general information only. CGT rules are subject to change and depend on individual circumstances. Always obtain specialist tax advice before disposing of UK assets or changing your residence.

Non-Resident CGT on UK Residential Property

When the Charge Applies

Non-UK residents have been subject to UK CGT on disposals of UK residential property since 6 April 2015. The Non-Resident CGT (NRCGT) charge applies to:

• All gains on UK residential property arising on or after 6 April 2015
• Disposals by individuals, trustees, and personal representatives who are non-UK resident
• Both direct ownership (holding property personally) and certain indirect ownership structures

For disposals before 6 April 2015, the relevant CGT rules do not apply — only the post-April 2015 gain is taxable.

CGT Rates for Non-Residents

Non-resident individuals pay CGT on UK residential property gains at:

• 18% for gains that fall within the basic rate band
• 24% for gains above the basic rate threshold

Trustees and personal representatives pay 24% on residential property gains.

Annual returns and tax payment are required within 60 days of the completion of the disposal. This is a strict deadline that many sellers and their advisers miss, resulting in automatic penalties and interest charges.

The Annual Exempt Amount

Non-UK residents are entitled to the same annual CGT exemption as UK residents. The exemption amount has been reduced significantly in recent years — from £12,300 in 2022/23 to £6,000 in 2023/24 and £3,000 from 2024/25 onwards (£3,000 for the 2026/27 tax year). Trustees and companies do not benefit from the personal exemption.

Principal Private Residence Relief for Non-Residents

Principal Private Residence (PPR) relief exempts gains on a main home from CGT. Non-UK residents can claim PPR on UK residential property, but only if they (or a spouse/civil partner) have occupied the property as their only or main home for the periods in question. Additionally, for non-residents to claim PPR, they (or a close family member) must have spent at least 90 nights in the property during the tax year in which the disposal occurs (or in the year the property stopped being their main residence).

This "90-day test" is an important restriction: a non-resident who owns a UK home but has not spent sufficient nights there cannot claim full PPR.

Non-Resident CGT on UK Commercial Property and Land

Expansion from April 2019

The scope of UK CGT for non-residents was extended from April 2019 to cover all UK land — not just residential property. This includes:

• UK commercial property (offices, shops, industrial units, hotels, etc.)
• UK development land
• UK agricultural land

The charge applies regardless of the non-resident's country of tax residence and regardless of treaty protections in many cases (though treaty claims should be reviewed with a specialist).

Land-Rich Companies

The 2019 extension also introduced rules for disposals of interests in "land-rich" companies or partnerships — entities where at least 75% of the gross asset value derives from UK land. This prevents non-residents from avoiding UK CGT by holding UK property through companies and then selling the company rather than the property directly.

The land-rich company rules apply to disposals of shares (or other interests) in entities that meet the 75% test, where the seller has a 25% or greater interest in the entity (or has had a 25% interest at any point in the preceding two years).

UK Business Assets: Branches and Permanent Establishments

Non-residents who carry on a trade in the UK through a permanent establishment (such as a branch or agency) are subject to UK CGT on gains arising from assets used in that trade. This is a more limited charge than the property rules, but business owners with UK trading operations should ensure they understand the CGT implications of disposing of UK business assets.

The Temporary Non-Residence Rules

The Problem the Rules Address

Without the temporary non-residence rules, a UK resident could:

1. Leave the UK and become non-resident
2. Dispose of assets with large unrealised capital gains while non-resident (paying no UK CGT as a non-resident)
3. Return to the UK shortly afterwards

The temporary non-residence rules prevent this.

How the Rules Work

If an individual has been UK resident for at least four out of seven UK tax years before their departure year, and they return to UK residence within five complete UK tax years of leaving, then gains accrued during the period of non-residence are treated as arising in the year of return to UK residence. The returning individual pays UK CGT on those gains as if they had been UK resident throughout.

The five-year absence period is counted in complete UK tax years (6 April to 5 April). Returning in year five is insufficient — five complete tax years must elapse.

Assets Within Scope

The temporary non-residence rules apply to gains on most UK and overseas assets, with some exceptions. Importantly, UK residential property gains are always subject to UK CGT for non-residents under the NRCGT rules regardless of the temporary non-residence rules — the NRCGT charge is a separate, more extensive regime.

Planning Implications

Individuals who plan to leave the UK and return within five years must be aware that gains realised during the absence may be taxable on return. Individuals who plan to be non-resident for more than five complete tax years have more flexibility, but should take advice before assuming gains will be permanently outside the UK CGT net.

Pre-Return Planning: Accruing Gains While Non-Resident

For individuals who have been non-resident and are planning to return to the UK, there is a window of opportunity before the return date to:

• Dispose of non-UK assets with unrealised gains while still non-resident and before the temporary non-residence rules become relevant
• Review the portfolio and consider crystallising gains that would be taxable on return
• Consider the timing of the return — the tax year of return is significant, and planning the precise return date can affect which gains fall inside and outside the UK tax net

Advance planning before resuming UK residence is strongly recommended.

Double Tax Treaty Interactions

Some double tax treaties provide that gains on certain assets (particularly shares) are only taxable in the country of residence of the seller, not in the country where the assets are located. However:

• UK domestic legislation on UK property CGT takes precedence over some treaty provisions (the UK has specifically modified its approach to treaty exemptions in the property context)
• Treaty claims in the context of UK property CGT require careful analysis by a specialist

Simply assuming that a favourable treaty protects a non-resident from UK CGT on UK property is not a safe approach.

Annual Return Obligations

Even if no CGT is payable (for example, because the gain is covered by the annual exemption, or because the non-resident claims treaty relief), a return may still be required within 60 days of completion of a UK property disposal. Failure to file, even where no tax is due, can result in penalties.

How Global Investments Can Help

Global Investments advises internationally mobile individuals on the UK tax implications of owning and disposing of UK property and other assets. Whether you are currently non-resident, planning to leave the UK, or planning a return after a period abroad, understanding your UK CGT position is essential before making investment or disposal decisions.

Our advisers work with specialist UK tax counsel to help clients plan property disposals tax-efficiently, manage the timing of return to the UK, and ensure all required returns are filed on time. With experience across our key markets — including the UAE, Cyprus, Spain, and the UK — we understand the cross-border dimensions of property investment for internationally mobile HNW individuals. Contact us to discuss your position.