UK Capital Gains tax for UK expats - Know the rules.

UK Capital Gains Tax is a tax which is levied against the profits made on assets, this article looks at how non-UK residents are affected by UK capital gains tax.

UK Capital Gains Tax: A quick summary

• Asset disposals/sales (selling property, shares, business interests) may trigger CGT, even when not tax resident in the UK.

• 2025/26 CGT Allowance: £3,000 annual exempt amount.

• CGT Rates:Residential property: 18% basic, 24% higher-rate taxpayers.Other assets: 18% / 24%.Business Asset Disposal Relief: 10%.

• 60-day reporting: Must report & pay CGT on UK residential property within 60 days of completion.

• Rebasing property purchase value: If the property was purchased before April 2015, you can rebase valuation to April 6, 2015.

• CGT Reliefs: Private Residence Relief, Lettings Relief, allowable costs (improvements, fees).

What is Capital Gains Tax?

Capital Gains Tax is the tax which is due as a result of the financial gain (often referred to as profit) received once an asset is sold or disposed of.

How is capital gains tax calculated?

The total gain is calculated by subtracting the sale value from the original purchase value:

Total gain/profit = Sale value – Purchase cost – Allowable expenses (like improvements, legal fees) - Reliefs.

For example, if you are selling a residential property, the sale value will normally be the sale price or, in some cases, the market value which the property could be reasonably expected to sell for in an open market.

It may also be possible to deduct the costs of any improvements made to the property during ownership. These costs may include advice received, general improvements (but not decoration or maintenance) and other legal and professional costs incurred. Costs will require evidence, such as receipts of work carried out.

Once the total gain has been calculated, any tax relief and tax-free allowances are taken into account before calculating the Capital Gains Tax charge, using the appropriate rate.

Where do I need to pay capital gains tax if I don't live in the UK?

Firstly, you will likely need to file and pay capital gains tax in the UK, including property sales and when due, reporting and payment is required within 60 days of the disposal or sale of the asset.

You also have to establish whether you are a tax resident in the UK or not as this will determine the rules and tax owed. You establish your UK tax residence status using the Statutory Residence Test.

Do I also have to pay tax in my country of residence?

Potentially. Whether you owe tax on any gains, and how much tax you owe, will depend on the tax rules in your country of residence. Some countries do not have CGT or an equivalence, while others may have higher rates. You should also check with a local tax specialist your local requirements.

UK–Portugal Double Taxation Agreement and Capital Gains

The UK–Portugal Double Taxation Agreement (DTA) ensures that individuals are not taxed twice on the same income or gains. Under the treaty, tax residency determines which country has primary taxing rights. For most UK nationals who become Portuguese tax residents, investment income and capital gains are taxable only in Portugal, with the UK granting relief or exemption. Portugal generally exempts capital gains on overseas assets, except for property situated in Portugal or certain short-term holdings. As such, when structured correctly, UK investments and portfolio disposals can often be realised free of UK or Portuguese CGT, provided the client is demonstrably Portuguese tax resident under the 183-day rule or centre-of-vital-interests test.

Do I have to pay tax in one or more countries?

This is unlikely, providing there is a double tax treaty in place between the UK and your country of residence. Double tax treaties exist between countries to establish what taxes are paid and where, and in many cases ensure people are not having to pay double tax. Interpretation of double tax treaties will need a specialist, as the language used can sometimes be ambiguous - and it's simply not worth taking the risk to get it wrong by doing it yourself.

What assets do I have to pay Capital Gains Tax on?

Assets which are liable for Capital Gains Tax include all forms of property (unless specifically exempt), certain gifts made, sale of assets acquired by inheritance, shares and assets transferred through divorce, or civil partnerships which have been dissolved.

What are the UK Capital Gains Tax rates in 2025?

In the UK, Capital Gains Tax for residential property is charged at the rate of 24% where the total taxable gains and income are above the income tax basic rate band. Below that limit, the rate is 18%.

For non-residential property and other assets, the rates are also 18% and 24% for individuals.

When selling a non-publicly listed business, if you are eligible, you may benefit from Business Asset Disposal Relief under which you will only have to pay 10% on the sale of a business or business shares.

Below is a summary of the core Capital Gains Tax rates that apply from 6 April 2025:

• Individuals: 18% and 24% a (excluding carried interest gains)

• Individuals for residential property gains: 18% and 24%

• Individuals for carried interest gains: 32%

• Trustees: 24% (including residential property gains)

• Personal representative of someone who has died: 24% (including residential property gains, but excluding carried interest gains)

• Personal representative of someone who has died for carried interest gains: 32%

• Business Asset Disposal Relief (formerly Entrepreneurs Relief): 14%

These figures are taken from HMRC's website, which is not specifically written with expats and non-residents in mind.

What Capital Gains Tax reliefs are available?

There are several different tax reliefs which can reduce the chargeable gain:

• Principal Private Residence (PPR) relief. PPR reduces or eliminates Capital Gains Tax (CGT) when you sell a property that has been your main home. If you’ve lived in the property as your primary residence throughout your ownership, you're typically fully exempt from CGT. Even if you only lived there for part of the time, you may still qualify for partial relief, including for certain periods when you were absent (such as the final 9 months of ownership or time spent working away). PPR rarely applies to properties used solely for letting or business.

• Rollover/holdover relief on replacement of business assets. This relief allows you to defer the CGT on the gain of a business asset, where this is matched with a replacement of a new business asset in the period commencing one year before and ending three years after the disposal.

• Business incorporation relief. This is available when you transfer your business into a Limited Company in exchange for shares.

• Holdover gift relief. on some gifts of business assets, or gifts made into trusts, whereby tax does not become payable until the person, or trustee, who receives the gift disposes of it.

• Business Asset Disposal Relief (formerly Entrepreneurs' relief). This allows disposal of a material part or all of your business to have the CGT rate reduced to 10%. There is a lifetime limit which from 6 April 2020 is £1million.

What is the "absorption of capital losses"?

Any capital losses made on a chargeable transaction are netted off against any capital gains made in the same tax year. They are applied before the annual exemption. Unused capital losses are carried forward against future capital gains; they cannot normally be carried back. To make use of a capital loss it must be reported to HMRC within five years and ten months of the end of the tax year in which it arose.

Is there a Capital Gains Tax allowance?

Yes, there is an annual capital gains tax allowance of £3,000 for the 2025/26 tax year which is available to individuals. Total gains made in the tax year up to this amount are exempt.

Any unused annual exemption is lost and cannot be carried forward or transferred to another person.

Are there any Capital Gains Tax exemptions?

• Selling your main residence. The sale of your only or main residence is exempt, although it can become partly chargeable in some circumstances where it is let out or used for business purposes.

• Transfers of assets between husband and wife or civil partners. Such transfers are normally treated as being made at no gain/no loss.

• Chattels/Personal property. Most chattels whose value decreases over time (called wasting assets).

• Non-wasting and business chattels where acquisition cost and disposal proceeds do not exceed £6,000.

• Cars. Certain private motor cars.

• Gifts to charity. Gifts to charity and certain amateur sports clubs.

• Some savings. SAYE contracts, savings certificates and premium bonds.

• Gambling. Betting winnings and prizes including the lottery.

• Compensation. Compensation for damages for personal or professional injury and some compensation pay-outs for miss-sold pensions.

• Life assurance. Life assurance policies in the hands of the original owner or beneficiaries.

• Company re-organisations and takeovers where there is a share for share exchange.

Is Capital Gains Tax due on property sold by non-residents?

Yes, but not always. The rule, which came into effect on April 6, 2015, particularly affects British expats and non-UK residents with UK property and especially those with buy-to-let agreements which generate an annual income.

While it is possible to be assessed for CGT on the original value of the residential property, you may elect to have the gain assessed on the 5th April 2015 market value of the property if owned before this date.

Properties bought before 5th April 2015 can have their values rebased to the value as at 6 April 2015.

Where possible, therefore, it is recommended that you seek a professional opinion on the property value as at 5 April 2015 to establish an accurate understanding of the gain/loss made from this date to date of sale.

Simple capital gains tax calculation for property sale

Kevin, a long term UK non-resident, sells a property in June 2025 for £400,000. Kevin did not live in this house and is a higher rate tax payer.

• 2005 purchase at £125,000, rebased to £200,000 as of 5th April 2015. 

• Spent £20,000 on improvements in June 2016.

• Gain = £400k – £200k – £20k = £180k

• After £3k allowance: Taxable amount: £177k

• As a higher-rate payer, CGT rate is 24%. CGT owed = 24% × £177k = £42,480

• Report & pay within 60 days of completion.

How soon do I need to report and pay capital gains tax?

From 27th October 2021 people selling their residential properties are required to pay the full amount owed within 60 days from the completion date of the sale. This was increased from 30 days, a rule which was introduced in April 2020.

If you are selling a property that has been your main residency in the past, you will qualify for tax relief for the period of time you lived in the property over the whole ownership period.

For non-UK residents, selling UK property, there is the option to have the chargeable gain on the sale assessed against the 5 April 2015 market value of the property but when electing to do so, tax relief is available for 9 months only of the total period of ownership from 6 April 2015 to date of sale, if the property was once your main residence. (Prior to 6 April 2015, no CGT was due from non-UK resident on UK property disposals. This is discussed in greater detail below.)

If you are unsure of how the changes will directly affect you, it is vital that you seek professional assistance from a specialist in non-resident tax affairs. We can assist you by introducing you to a tax specialist from our network who will ensure that you are paying the correct amount of tax.

How do I report capital gains tax as a non-resident?

There are two ways for you to report capital gains tax in the UK:

• Do it yourself. When you have sold a property or asset, you have 60 days to report the gains and tax due. You can do this online using the HMRC online reporting tool. Through this process you will need to confirm your tax residence status, any reliefs and an accurate calculation of tax owed. If you underpay, you will end up with a penalty, if you overpay any tax it is extremely difficult to claim back.

• Use a UK tax specialist. This is the preferable option for most people as capital gains tax calculations, residency planning and reliefs can be incredibly complex than in straight forward cases. The best time to engage a tax specialist is before the sale and completion to ensure you are aware of potential capital gains tax obligations so you can factor these into current and future decisions.

The UK Capital Gains Tax 5-year rule for expats and non-residents

It used to be the case that by simply leaving the UK for a complete tax year and then disposing of any profitable assets (although different rules have always applied for property) during that year, you could be exempt from Capital Gains Tax. However, one year is no longer a sufficient length of time and an individual now must be non-resident for a minimum of five complete UK tax years to take advantage of this rule. 

Proper planning is clearly very important in these situations as timing can make a significant difference in your tax liability.

Even though you may be deemed non-resident for income tax purposes, you are treated as temporarily non-resident for Capital Gains Tax purposes for up to 5 years. 

Certain gains made during that time are taxed in the year you return to the UK if within five years.

If, however, the asset (being non-property related), such as a portfolio investment, was acquired after you had left the UK, any gain realised is not subject to UK Capital Gains Tax if you are indeed non-UK resident.

When double taxation agreements are taken into account, capital gains may be completely exempt from UK tax but taxable in the country where you reside.

Other frequently asked questions about Capital Gains Tax

Do I have to report CGT if it's below £3,000?

Yes, all UK residential disposals must be reported, even if no tax is due (and within 60 days of sale/completion).

Can I rebase a property's value if it was bought before April 2015?

Yes, you only pay capital gains tax on gains made after April 6, 2015, so you have to establish a property valuation as of 5th April 2015.

What happens if I miss the 60-day deadline?

You will incur late reporting penalties & interest on tax owed. You must contact HMRC asap and our recommendation is to hire a UK tax specialist to help you.

Does currency fluctuation affect capital gains tax owed?

Yes. This is vital to understand when living abroad. All UK gains are calculated in £GBP based on exchange rates on purchase and sale dates.

Speak to a UK Capital Gains Tax specialist

Whatever your situation, speaking to a UK (and potentially a Portuguese) tax specialist is essential to minimise and correctly file your capital gains tax.

Our free consultation enables you to have a free discovery call with a UK adviser.