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2 out of every 3 British expats are unaware of potential UK Capital Gains Tax implications when selling a UK property

Rising mortgage rates and the prospect of declining UK property values have prompted a quarter of expats to consider selling their UK properties – but less than half are seeking the expert advice they need because they are unaware of their potential requirement to file a Capital Gains Tax (CGT) report within 60 days of completion.

Written on 22 May 2023

Rising mortgage rates and the prospect of declining UK property values have prompted a quarter of expats to consider selling their UK properties – but less than half are seeking the expert advice they need because they are unaware of their potential requirement to file a Capital Gains Tax (CGT) report within 60 days of completion.

In our first Expat Cost of Living Survey conducted at the end of 2022, we found that almost a quarter of expats are considering selling their UK properties due to rising mortgage rates and declining property prices – a direct consequence of the current cost of living crisis and recent global events.

We have also seen an increase in traffic around CGT information on ExpertsforExpats.com over the past 12 months, including researching potential CGT bills, making the number of people still unaware of the UK tax obligations even more concerning.

Our survey found that of the 61% of expats who weren’t aware of the CGT requirements of selling a UK property, most were actively considering selling a UK property – yet only 52% would consider getting professional financial advice before selling.

Nearly half of the people surveyed (48%) were currently renting their UK property out, meaning it would almost certainly be subject to UK capital gains tax rules should they choose to sell.

Did the 2015 Capital Gains Tax Changes go unnoticed?

The Capital Gains Tax rules for non-residents changed in April 2015. While this feels like a long time ago, it is still relatively recent considering that the UK housing market has generally been positive and growing, with the past 12 months feeling like the most negative since the 2008 financial crisis.

The changes to CGT rules in 2015 meant that any UK property not considered a primary residence, whether the seller is a UK resident or not, would be subject to capital gains tax in the UK.

Sudden changes in property price forecasts in the UK have prompted many expats to contemplate major life and financial decisions for the first time since moving abroad.

Speaking to our UK tax partners who regularly assist expats and non-residents with capital gains tax reporting when selling properties, there appear to be two underlying reasons why expats are not aware of CGT rules:

  1. Most commonly, the person selling the UK property moved abroad before the 2015 CGT changes came into force and has subsequently failed to stay up to date on the tax changes.
  2. Some expats assumed that being a non-resident of the UK meant they had no UK tax requirements, and it was only when entering the process of selling their property that they became aware.

Given that a CGT bill may not be insignificant, it could be an unexpected hit which impacts expats’ financial plans for the future – whether that’s providing additional resources for everyday living, or changing investment strategies.

Worse still, once a property is sold, the clock starts ticking for reporting and paying the capital gains, although the deadline was increased from 30 days to 60 days from completion in October 2021.

If the deadline for reporting is missed, the person will be subject to a late filing penalty and potential interest on the late payment itself. With interest rates rising quarterly, this bill could quickly escalate if not addressed immediately.

Always seek help from an expert before making major financial decisions

Ultimately ignorance is not an excuse, making the fact that so many expats are unaware of their potential CGT requirements despite actively considering selling a property deeply troubling.

The view of Experts for Expats and our partners is that no major financial decisions should be left to chance or internet research.

Using our website, it only takes 5 minutes to engage a specialist who understands the complexities around international tax and finance, and a short no-obligation conversation will help to clarify if further action is needed.

At Experts for Expats, our goal is to enable these conversations by connecting expats and non-residents with experienced, trusted experts who focus on providing trusted advice first and foremost.

For over a decade, we have been providing a personalised introduction service focused on successfully connecting expats with our partners.

We don't use algorithms or AI, nor do we pass details to third parties who aren't part of our trusted network. Every introduction request we receive is reviewed by a person and Experts for Expats receives no payment unless the introduction is successful.

All our partners offer free, initial consultations designed to provide general guidance based on the information provided in the request. While this is limited to general information, there is no sales push and there is no obligation to proceed with paid services.

We aim to educate and provide support for all expats, removing the stress of international financial matters.

Download our full Cost of Living Report for more insight and advice for expats

Our latest report, How Rising Living Costs Are Impacting Expats' Financial Choices in 2023 goes into more detail on the global factors influencing expat finances, life decisions and mental well-being as well as how expats can ensure they’re making the right choices to secure their future in this time of global uncertainty.

Download the full report >

Getting the right advice from a regulated, independent financial adviser gives expats comprehensive support to plan for their future by managing their money well today.

At Experts for Expats every introduction is dealt with by hand and we only work with people we trust. 

Expats can request a free introduction to a fee-based independent financial adviser at expertsforexpats.com

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