UK Capital Gains Tax for Expats: Property & Investment Tax Rules 2025

You moved abroad years ago, built a new life in Spain or Dubai, and thought you'd left UK tax complications behind. Then you decide to sell that London flat you've been renting out, or cash in some UK investments, and suddenly you're facing a maze of Capital Gains Tax rules that seem designed to catch you out.

Leaving the UK doesn't mean leaving UK tax obligations behind, especially when it comes to Capital Gains Tax. Whether you're selling property, shares, or business interests, the UK taxman often wants his cut – even if you haven't lived in Britain for years.

The key is understanding exactly what you owe, when you need to pay it, and how to legitimately minimise your liability. 

Here's everything UK expats need to know about Capital Gains Tax in 2025.

What Is Capital Gains Tax and When Does It Apply?

Capital Gains Tax is the tax you pay on the profit you make when you sell or dispose of an asset that has increased in value. It's the gain you're taxed on, not the total amount you receive. Think of it as the difference between what you paid for something and what you sold it for, minus any allowable costs and reliefs.

For UK expats, the crucial point is that your tax residence status doesn't automatically exempt you from UK Capital Gains Tax. Certain UK assets – particularly property – remain within the UK tax net regardless of where you live. This came as a shock to many expats when the rules changed in April 2015, suddenly bringing UK residential property sales by non-residents into the CGT regime.

The calculation itself is straightforward in principle: Sale price minus purchase price minus allowable expenses equals your taxable gain. However, the devil is in the details – what counts as an allowable expense, which reliefs apply, and how rebasing rules work can significantly impact your final tax bill.

Assets subject to UK Capital Gains Tax include:

• UK residential and commercial property
• UK shares and securities (in some circumstances)
• Business assets and goodwill
• Certain personal possessions worth over £6,000

Current CGT Rates and Allowances for 2025/26

Understanding the rates is crucial for tax planning. For the 2025/26 tax year, the annual exempt amount has been reduced to just £3,000 – a significant drop from previous years that catches many expats off guard.

CGT rates for 2025/26:

• Residential property: 18% for basic rate taxpayers, 24% for higher rate taxpayers
• Other assets: 18% for basic rate taxpayers, 24% for higher rate taxpayers
• Business Asset Disposal Relief: 10% (with lifetime limit of £1 million)

Your rate depends on your total UK taxable income and gains for the year. If your UK income plus capital gains exceed the basic rate threshold, you'll pay the higher rates on the excess. This is particularly important for expats who might have minimal UK income but substantial capital gains from property sales.

The £3,000 annual exemption applies per person, so married couples can potentially use £6,000 between them if both are beneficial owners of the asset. However, any unused exemption is lost – you can't carry it forward to future years or transfer it between spouses retrospectively.

The Game-Changing April 2015 Rules

Before April 6, 2015, non-UK residents could sell UK property without paying UK Capital Gains Tax. This changed dramatically when the government extended CGT to UK residential property disposals by non-residents, catching many expats unprepared.

However, there's a crucial relief available. If you owned your property before April 6, 2015, you can elect to "rebase" its value to the market value on that date. This means you only pay CGT on gains made after April 2015, potentially saving thousands in tax.

The rebasing election is crucial but must be made carefully. You need a professional valuation of your property as at April 6, 2015, and once you make the election, you're committed to it. For most expats with pre-2015 properties, rebasing significantly reduces the CGT liability, but professional advice is essential to get this right.

The Critical 60-Day Reporting Rule

This is where many expats get caught out. When you sell UK residential property, you must report the disposal and pay any CGT due within 60 days of completion. This isn't 60 days from when you receive the money or when your solicitor finalises everything – it's 60 days from the completion date on the contract.

The reporting requirement applies even if no tax is actually due. If your gain is covered by reliefs or falls within your annual exemption, you still must report the disposal within 60 days. Failure to meet this deadline triggers automatic penalties, even if you don't owe any tax.

Missing the deadline can be expensive. HMRC imposes penalties starting at £100 for late reporting, with additional penalties if the delay continues. Interest also applies to any unpaid tax from the original due date, not from when you eventually pay.

The process involves:

• Calculating your gain and tax liability
• Completing HMRC's online reporting form
• Paying the CGT due immediately
• Following up with your annual Self Assessment if required

Many expats assume their UK solicitor will handle this, but the obligation sits squarely with the seller. Your solicitor might remind you, but they won't complete the reporting or pay the tax on your behalf.

Tax Residence vs CGT Obligations

Your UK tax residence status affects how much CGT you pay, but it doesn't determine whether you owe it at all. This distinction confuses many expats who assume that being non-UK resident exempts them from all UK taxes.

UK tax residents pay CGT on worldwide gains, subject to double taxation relief for taxes paid abroad. Non-UK residents pay CGT only on UK assets, primarily residential property and certain business assets.

However, there's a significant complication: the five-year rule for temporary non-residence. If you're a UK resident who becomes non-resident but returns to UK residence within five complete tax years, certain capital gains made while non-resident are taxed in the year you return.

This rule primarily affects gains on assets you owned before leaving the UK, with some important exceptions. Gains on assets acquired after becoming non-resident generally aren't caught by this rule, and the timing of your departure and return can be crucial for tax planning.

Property-Specific CGT Rules for Expats

Selling UK property as an expat involves several unique considerations beyond the basic CGT calculation. Principal Private Residence (PPR) relief can significantly reduce your liability if the property was ever your main home, but the rules for expats are more restrictive than for UK residents.

If you lived in the property as your main residence before moving abroad, you may qualify for PPR relief for the period you lived there, plus the final nine months of ownership regardless of whether you were living there. However, for periods when you were abroad and the property was let out, PPR relief generally doesn't apply.

Lettings relief used to provide additional relief for expats who let out their former main residence, but this has been significantly restricted since April 2020. It now only applies if you're sharing occupancy with tenants, making it largely irrelevant for most expat property sales.

Currency fluctuations add another layer of complexity. All CGT calculations must be done in sterling, using exchange rates on the original purchase date and sale date. If you bought your property with foreign currency earnings, this can create unexpected gains or losses purely from currency movements.

Allowable expenses that can reduce your gain include:

• Legal fees and estate agent costs
• Stamp duty on purchase
• Improvement costs (but not repairs or maintenance)
• Professional valuation fees

Investment and Share CGT Rules

While property gets most attention, expats also need to understand CGT on UK investments and shares. The rules here depend heavily on your tax residence status and the type of investment.

Non-UK residents generally aren't liable for CGT on UK shares and securities, unless they're substantial shareholdings in UK companies or qualify as "UK land rich" companies. However, if you return to UK residence within five years, gains on investments owned before you left might be taxed in your return year.

Business Asset Disposal Relief

Business Asset Disposal Relief (formerly Entrepreneurs' Relief) can be particularly valuable for expats selling UK businesses or substantial shareholdings. This reduces the CGT rate to 10% on qualifying disposals, with a lifetime limit of £1 million. The relief has specific qualifying conditions around ownership periods and the nature of the business.

For expats with UK pensions or ISAs, different rules apply. Pension withdrawals aren't subject to CGT, and ISAs maintain their tax-free status even for non-residents, though you generally can't make new contributions while non-resident.

Double Taxation Relief and Treaty Benefits

Living abroad often means you're tax resident in another country, potentially creating double taxation on the same gains. The UK has an extensive network of double taxation agreements designed to prevent this, but the detail matters enormously.

Most treaties allocate taxing rights on property to the country where the property is located. This means your UK property gains are typically taxable in the UK regardless of your residence status, but you should get relief in your country of residence.

However, some countries don't have capital gains tax at all, meaning you might pay UK CGT with no corresponding relief. Others have higher CGT rates than the UK, creating additional liability in your residence country.

The key is timing and planning. Some expats benefit from triggering gains in years when their overseas tax rates are lower, or when they have capital losses in their residence country that can offset UK gains.

Common Expat CGT Planning Strategies

Smart planning can significantly reduce your CGT liability, but it requires understanding both UK rules and your residence country's tax system. Timing asset disposals around changes in residence status can be particularly effective.

Pre-departure planning is crucial if you're planning to leave the UK. Realising gains before you become non-resident ensures you're not caught by the five-year rule if you return. Alternatively, triggering losses before departure can provide valuable relief against future gains.

Spousal transfers can be particularly valuable for expats. Transfers between spouses are generally tax-free, allowing you to use both annual exemptions and potentially benefit from different tax rates if one spouse is basic rate and the other higher rate.

Timing of property improvements can also matter. Substantial improvements made shortly before sale are fully allowable against the gain, while routine maintenance isn't. Planning major improvements as part of your disposal strategy can reduce your CGT liability.

Currency Considerations for Expats

Currency fluctuations can significantly impact your CGT calculation in ways that might not be immediately obvious. Since all calculations must be done in sterling, you need accurate exchange rates for both your original purchase and eventual sale.

This can create particular complications for expats who bought property with overseas earnings or who receive sale proceeds in foreign currency. A property might show a sterling gain for CGT purposes even if it made a loss in your local currency, or vice versa.

Record keeping is crucial. HMRC expects you to use appropriate exchange rates – typically the daily rates published by recognised sources like XE.com or the Bank of England. Using inappropriate rates can lead to incorrect calculations and potential penalties.

For expats making regular remittances to the UK for property expenses, maintaining detailed records of exchange rates and the sterling cost of improvements is essential for CGT purposes.

When Professional Help Is Essential

CGT for expats is complex enough that professional advice often pays for itself, particularly for higher-value transactions or complex ownership structures. The interaction between UK CGT rules, your residence country's tax system, and double taxation treaties requires specialist knowledge.

You definitely need professional help if:

• Your property was owned before April 2015 and needs rebasing
• You've been non-resident for close to five years and might return
• You have complex ownership structures or multiple properties
• Your residence country has specific CGT rules that might interact with UK tax
• You're considering major financial planning around your UK assets

The cost of getting specialist advice upfront is almost always less than the cost of fixing mistakes later, particularly when penalties and interest are involved.

Need Help with Your UK CGT Obligations?

Navigating UK Capital Gains Tax as an expat can be complex, especially with property rebasing, currency calculations, and international tax treaty implications.

Book a strategy call where we'll look at your specific assets and CGT exposure, explain applicable reliefs and planning opportunities, clarify reporting deadlines and obligations, and discuss ongoing support for complex situations.

Whether you're planning to sell UK property, wondering about rebasing elections, or trying to understand how the five-year rule affects your situation, we'll give you clear, actionable guidance tailored to your circumstances.

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