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8 March 2022

Non-UK resident disposals of UK property

Since April 6th 2020, property disposals by non-residents have to be declared online with a UK Property Disposal return, through HMRC’s UK property reporting service, within the current 60-day reporting deadline. Any capital gains tax assessed should also be paid within this same deadline. Reporting a property disposal requires a Government Gateway User ID and a need too for a ‘capital gains tax on UK property’ account to be created.

For many non-residents, however, numerous issues prevent access to the Government Gateway and often there is a need to request HMRC to send a paper formatted return to the non-resident for completion and signature by ink, in the traditional format. This often proves to be a lengthy process and relies on an efficient postal service which impacts the 60-day reporting deadline.

Once notified of the property disposal, either online or in paper format, HMRC will issue a payment reference number for use when arranging any settlement of the capital gains tax due. It is understood that HMRC will recognise the difficulties in meeting the 60-day deadline if the UK property charge has to be processed manually but it is recommended that you keep a log of the difficulties encountered and any discussions with HMRC in the event of any late filing or late payment penalties arising.

When such difficulties are encountered, we often advise the client to phone HMRC to see if they will set up a capital gains tax on UK property account while on the phone. Occasionally this seems to work and although time-consuming it does avoid the need to file a paper return.

If you do not have a Government Gateway ID set up, it is useful to start the process in advance of completing the property sale, given the 60-day filing deadline.

Following the sale, if you have a need to file annual self-assessment tax returns, the disposal also needs to be declared on the tax return for the relevant year in which the sale occurred. But this is only the case where you have a need to file annual tax returns as a matter of routine.

If there is ever a need to amend a UK Property Disposal return, before any self-assessment tax return has been filed declaring the disposal, this can be done either with a new property disposal form or arranged via the annual self-assessment tax return. However, amendments are often complex to arrange, especially if CGT has been overpaid, and may only be possible via the annual self-assessment tax return.

Get in touch now if you have plans to dispose of UK property as a non-UK resident. HMRC recognise that the process can be completed much quicker with the support of a tax agent.