Selling UK property from abroad? The 60-day tax return you need to know about
Sponsored content. This article was supplied by a third party and Business Money has been paid to publish it.
If you live overseas and sell a property in the UK, there is an HMRC reporting deadline that is often overlooked.
Many of the non-resident property owners I speak to are unaware of the requirement until after the deadline has passed. Most assume they can simply report the sale on their annual self-assessment tax return, but the rules require a separate return within 60 days of completion. This applies even where there is no Capital Gains Tax to pay.
Who needs to report a property sale?
If you are non-resident in the UK for tax purposes, you must report disposals of UK property and land to HMRC.
One important distinction between UK residents and non-residents is the reporting obligation.
UK residents only need to submit a 60-day property return where Capital Gains Tax is payable on a residential property disposal. Non-residents must report disposals even where the property is sold at a loss or the gain is fully covered by reliefs.
For example, if you sell your former UK home and the entire gain qualifies for Private Residence Relief, you may have no tax liability. However, you must still submit the return. Where a property is jointly owned, each non-resident owner is responsible for reporting their share of the disposal.
HMRC explains these requirements in its guidance for non-residents selling UK property.
When does the 60-day deadline start?
The deadline runs from the date of completion, rather than the date contracts are exchanged.
For example, if you complete a property sale on 1 March, you have until 30 April to report the disposal and pay any tax due.
60 days may seem reasonable, but it can pass quickly, particularly when you are managing a sale from overseas and need to obtain historical property records, valuations and access to HMRC’s online services.
How do you report the sale?
The disposal is reported through HMRC’s online Capital Gains Tax on UK property service. You can set up or sign in to your Capital Gains Tax on UK property account.
If you do not already have HMRC sign-in details, the service allows you to create them when you first register. Alternatively, you can appoint a tax adviser to submit the return on your behalf once the appropriate authorisation is in place. You will normally still need to set up your own Capital Gains Tax on UK property account to authorise the adviser.
Any Capital Gains Tax due must also be paid within the same 60-day period.
If you are required to complete a self-assessment tax return, the disposal must generally be included in that return as well. Any Capital Gains Tax already paid through the property return is credited against the final liability.
This means that reporting the gain on your annual tax return does not remove the requirement to submit the separate 60-day return.
HMRC also provides step-by-step guidance on reporting and paying Capital Gains Tax on UK property, including what information you need before starting.
How much Capital Gains Tax will you pay?
The amount of tax payable will depend on when you purchased the property, how it has been used and which reliefs are available.
For non-residents who owned UK residential property before April 2015, the gain is generally calculated by reference to the property’s market value on 5 April 2015.
These rules are important because you may not be taxable on the entire increase in value since you originally purchased the property.
There are alternative methods of calculating the gain. For residential properties owned before April 2015, the calculation can be based on the April 2015 market value, time apportionment of the overall gain, or the original acquisition cost. The appropriate calculation can make a considerable difference to the final tax liability.
You can use our non-resident Capital Gains Tax calculator to obtain an initial estimate and compare the different calculation methods.
You should also consider allowable expenses, including legal fees, estate agent fees and qualifying improvement costs, as well as any available Capital Gains Tax reliefs.
Private Residence Relief can be particularly relevant where you previously lived in the property before moving overseas.
I regularly see cases where the initial expected tax liability is significantly reduced once the appropriate rebasing method, expenses and reliefs have been considered.
The important point is to establish the correct gain before submitting the return, rather than assuming that the difference between the original purchase price and selling price is fully taxable.
What happens if you miss the deadline?
HMRC can issue an initial £100 penalty where the return is submitted late. Further penalties can arise where the return remains outstanding for three, six and twelve months. Interest will also be charged where tax is paid late. Importantly, late filing penalties can apply even where there is no tax liability.
If you have already sold a UK property while non-resident and have not submitted the required return, I recommend dealing with it as soon as possible.
Three things to check before completion
There are three areas I would recommend addressing before selling a UK property from overseas.
- Confirm your UK residence status. Your residence position determines which Capital Gains Tax rules apply. If you left the UK partway through the tax year, split-year treatment may also need to be considered.
- Prepare the Capital Gains Tax calculation. Gather your purchase documents, legal and estate agent fees, records of improvement costs and any relevant historical valuations. If you owned the property before April 2015, consider whether a retrospective valuation is required.
- Arrange access to HMRC’s reporting service. Set up your Capital Gains Tax on UK property account or appoint an adviser before completion, so the return can be submitted within the deadline.
A point for mortgage brokers and property professionals
For brokers, lenders and other property professionals working with clients based overseas, the 60-day reporting requirement is worth raising early in the sale process.
Non-resident clients may be familiar with their annual UK tax return but unaware that selling a property creates a separate and much earlier reporting obligation.
Refinancing a property does not, in itself, normally trigger a tax disposal. However, where a client is selling property as part of a wider refinancing or restructuring arrangement, the tax reporting position should be considered.
A simple reminder before completion can help clients avoid unnecessary penalties and ensure they have sufficient time to calculate and pay any tax due.
For non-resident property owners, the main consideration is to deal with the tax position before the sale completes. The calculation can require some work, particularly where the property has been owned for many years, but leaving it until after completion creates unnecessary pressure.
About the author
Emma McDermott ATT is the founder of Global Tax Consulting, a UK tax advisor for expats and non-residents. She previously worked at Deloitte and has been a member of the Association of Taxation Technicians since 2020.