Expat taxation change

EExpats who own property in the UK have been warned to take note of a tax charge which comes into force next month on sales of both residential and commercial property and land.

The Association of Taxation Technicians says that non-UK residents who sell any UK land or property from April 6 onwards must file a non-resident Capital Gains Tax return and pay any tax due within 30 days of the sale.

Non-UK residents selling a residential property have been liable to UK tax and required to file a tax return with HMRC within 30 days of sale since 6 April 2015.

But from 6 April 2019, these rules will apply to all sales of UK land and property both residential and commercial as well as disposals of substantial interests in companies which are “UK property-rich” – otherwise known as “indirect disposals”.

Any non-UK resident who owns an interest in UK land or property needs to be aware of these significant changes. In particular, those looking to sell need to be aware that they will have to file a non-resident Capital Gains Tax return with HMRC and pay any tax due, in a very short time frame.

For disposals of commercial property and indirect disposals, only an increase in value after 6 April 2019 will be subject to tax.

This means that, in the short term at least, any tax due on such disposals is likely to be minimal. Even if there is no tax due, or a property is sold at a loss, there is still a requirement to file a non-resident Capital Gains Tax return within 30 days or face penalties.

Good advice for expats who hold UK commercial land or property should consider getting their property valued as at 6 April 2019 whether or not they anticipate a future sale. In the event of such a sale, the value at that date would be used to calculate the taxable gain.

Non-UK resident individuals disposing of residential property will be subject to capital gains tax at 18 or 28% depending on whether they are basic rate or higher rate taxpayers

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For direct disposals of non-residential property and all indirect disposals (irrespective of whether the company holds residential or commercial property) the capital gains rates will be 10 per cent or 20% again depending on whether the taxpayer is a basic rate or higher rate taxpayer.