CGT Property Tax Penalties Clarified For Expats


Expats face extra penalties for not dealing with capital gains tax on selling homes in the UK.

HM Revenue & Customs has updated online guidance to clarify late CGT payment penalties.

The old guidance suggested that late payment penalties were the same as self-assessment late filing fines and interest would be added to any overdue tax.

The new advice separates CGT and self-assessment penalties.

HMRC has also confirmed daily penalties on CGT late-filing.

Paying CGT as a non-UK resident

“If you have to pay non-resident CGT within the same 30-day period as submitting the return late payment penalties may also be due if you miss the deadline,” says the guidance.

“If any non-resident CGT remains unpaid 30 days after the January 31 following the end of the tax year of the disposal then a late payment penalty of 5% of the tax outstanding will be charged.”

HMRC has also clarified CGT is not due on property to accommodate school pupils.

HMRC has not given an explanation for updating CGT guidance for non-residents.

Expats and other non-residents, including companies owning property, must tell HMRC within 30 days of the sale about the transaction even if they have no tax to pay.

If a property is jointly owned, each owner must report their share of any gain or loss.

Misunderstood CGT rules

The report must be filed online as a non-resident capital gains tax return.

The form also acts as claim for CGT refunds.

Recent research by expat financial provider Old Mutual International revealed 11% of expats did not realise they should pay income tax on rental profits from property let to tenants in the UK and 27% believed they had no capital gains tax liability if they sold the home while living abroad.

“Some expats seem to think that just because they no longer live in the UK they don’t need to declare their income or capital gains from savings and investments or property held in the UK,” said a media spokesman.

“By not declaring the correct taxes people can find they are investigated by HMRC, and the sanctions for non-disclosure are getting tougher.”

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