Many people are not aware that if they are not resident in the UK and sell or dispose of (and that can mean gifting) a UK residential property, they must notify HMRC within 30 days of the date of the transaction.
How do you let HMRC know?
You need to complete a NRCGT form, and to provide a computation of costs associated with your ownership, which helps calculate whether CGT is due.
You will need to include how much you paid for the property; any additional costs including professional advice, stamp duty, improvement costs or fees to establish the market value; and how much you were paid for the property.
You will need to be able to produce reliable supporting documentation.
Why do you need to let HMRC know?
Non UK residents who dispose of UK residential property on or after 5 April 2015 are liable to the same CGT rules as UK residents.
You need to submit a NRCGT, even if no CGT is due, otherwise you will incur a late filing penalty.
As a general rule if CGT is owed, it will need to be paid to HMRC within 30 days of the date of the sale.
If you already file a self assessment tax return, the CGT payment can be deferred (but not the NRCGT form).
If you are due to submit a self assessment tax return to HMRC for the tax year when the sale was made, you can defer payment of the CGT due and include it as part of your normal end of year tax payment (you will need to include details of the sale in the CGT part of your tax return). You will still need to file the NRCGT form within 30 days of the date of sale.
We've prepared an illustration of the relevant filing and payment dates as an example.
Property sold by a non UK resident individual.
|Property sold:||18 May 2018|
|NRCGT return due by:||17 June 2018|
|NRCGT to be paid by:||17 June 2018|
Property sold by a non UK resident individual who will be
filing a tax return in the same tax year.
|Property sold:||18 May 2018|
|NRCGT return due by (elect to defer payment of CGT):||17 June 2018|
|2018/2019 Self Assessment tax return due:||31 January 2020|
|All tax payments due by (including CGT):||31 January 2020|
What happens if you do not file a NRCGT on time?
HMRC will issue you with a late filing penalty if you do not file the NRCGT within 30 days.
If you are up to 6 months late the penalty is £100, over 6 months late the penalty will be an additional £300 or 5% of any tax due, whichever is greater,
If you are over 12 months late there is an additional penalty of £300 or 5% of any tax due, whichever is greater.
What happens if you do not pay the CGT on time?
If there is non resident CGT due, late payment penalties and interest may also be applied to the above penalties for late filing.
If the non resident CGT is not paid by 31 January a late payment penalty of 5% of the tax outstanding will be due.
If you are not UK resident and have any questions about the tax implications and tax obligations of selling your UK property please contact us for further advice.