selling property in the UK

Selling property in the UK – beware the UK’s new non-resident CGT rules

Are you thinking of selling property in the UK? As an expat in Britain, you need to be aware of changes to the law which could see extra taxes levied against the profit your property sale produces.

It is important to be aware of the Capital Gains Tax laws and how they will affect you as an expat. The rules vary depending on your residential status. However, bear in mind that temporary residents, non-residents and established citizens could all be subject to the new tax in some form.

Selling property in the UK – Update to UK’s Capital Gains Tax laws

Until 2015, a loophole existed in British law which meant British expats and foreign investors could avoid Capital Gains Tax (CGT) on a property sale, under certain conditions. Capital Gains Tax is a charge made against the profit received from the sale of an asset, usually a residential property. Main residences are usually exempt from the Capital Gains Tax; it is usually applied to second residential properties, and to property portfolios.

Avoiding CGT as a non-resident

To avoid paying this tax, a property owner could sell their assets after living outside of the UK for one year or more. These non-residents could, therefore, avoid the CGT charge entirely, and make a significant profit on a sale as a result.

The loophole has since been closed, with a change to the law made in April 2015. That new law has now come into effect and will be applied to all future residential property sales in the UK – as well as to all assets that have risen in value to the point of profit. It is important to note that an advantage will still be applied to those with non-resident status for more than five years prior to the sale.

Tax considerations for expats

This exposes thousands of expats to a new tax on gains from property held, and it requires action on the part of property owners to avoid accumulating high back taxes. The tax is set at 18% below the lower limit threshold, and 28% above this limit.

Residential property owners should take action, ordering an immediate valuation of their assets to determine whether Capital Gains Tax applies to their profits. It is also crucial that taxpayers keep good records of their time spent overseas or at home. Expats should especially be aware of their length of residential status – otherwise it will be very difficult to take advantage of the new five-year rule.

Tax in the UK isn’t all there is to worry about – so remember, if you need help with your Australian tax returns, contact us today at Expat Tax Services.

Shane Macfarlane
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Shane Macfarlane

CEO & Founder at Expat Tax Services
Shane's an Australian Chartered Accountant and Australian expat tax specialist who's also an expat himself (based in Asia).Shane's passionate about tax and legitimate tax minimisation, particularly as it relates to Australian expats who are often subject to high rates of tax back home in Australia.Beyond tax and accounting, Shane's an entrepreneur, having devised, created and founded a successful accounting startup, Fifo Workpapers (acquired by accounting software giant, Intuit inc. in 2013)

In short Shane's a tax and software techno-geek, who recognised that Australian expats were unable to obtain the specialist advice and quality service, that they needed from their accountants. Accordingly, Shane founded Expat Tax Services to provide Australian expats with access to specialist, quality advice at fair and reasonable prices (no hourly rates, fees quoted upfront with unlimited support included) . . . receive the support and advice you need without having to take second-mortgage to pay your accountant's bill! Speak to Shane & the team today.
Shane Macfarlane
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