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19th July 2015

Non-Resident Beware!

The rules regarding sales of residential property by Non Residents changed with effect from the 6th April 2015. Previously non-UK residents could sell UK property and pay no tax on the gain made since they had acquired it.

Previously non-UK residents could sell UK property and pay no tax on the gain made since they had acquired it. As part of the increasingly sharp eye which HMRC has to collecting tax from those not living here, that privilege has been withdrawn. It is not quite as simple, however, as just being liable to pay gains tax.

The link to the relevant section of the HMRC manual (and it is worth a quick read – especially if you have trouble sleeping) can be found by clicking here.

Any non resident who disposes of a UK property now has to report the disposal within 30 days of completion; otherwise you will be fined by HMRC for late notification – even if there has been no gain!

Whilst there are unlikely to be taxable gains at present (as the property sold can be revalued as at 5th April 2015 to provide a new base cost) a report still has to be submitted to HMRC with full details.

Bear in mind that:

  • for some properties it will not be advantageous to claim the revaluation basis
  • these rules affect gifts as well as sales
  • If you are a UK resident these rules apply to you if you are administering the estate of a non-UK resident
  • the residence rules have also changed and you may need to check your status.

Over the years gains will arise (assuming property prices continue to increase) and Capital Gains Tax will become payable – then the fines and criminal penalties involved become much worse.

We can help by completing the online form to report the disposal (and arrange payment of any tax out of the proceeds) at a low fee. If you would like help on this, or any tax or trust matter, please contact either Alan Taylor or his colleague Matthew Neave on 01223 461155 or email Alan by clicking here.

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