The UK remains an attractive destination for international property investors, offering stability, strong capital growth, and a transparent legal system. However, foreign investors must be aware of the Capital Gains Tax (CGT) obligations that apply when selling UK property. Understanding how CGT works, how it is calculated, and how to plan effectively is essential for maximising returns and ensuring compliance. Fraser Bond, a trusted real estate consultancy, offers expert advice to guide foreign investors through every aspect of UK property taxation, including CGT considerations.
Capital Gains Tax (CGT) is a tax charged on the profit (or gain) made when selling or disposing of a property. For foreign investors, this applies to:
Residential properties (houses, flats, serviced apartments)
Commercial properties (offices, retail, industrial buildings)
Indirect disposals (selling shares in a company holding UK property)
Since 6 April 2015 for residential property and 6 April 2019 for commercial property, non-UK residents have been subject to UK CGT when disposing of property assets.
You are liable for CGT if you are:
A non-resident individual
A non-resident company
A non-resident trust
and you dispose of a UK property asset at a gain.
The gain is the difference between the sale price and the purchase price (or the property’s market value as of the “rebasing date” if applicable).
Rebasing:
For residential properties: You can elect to rebase the value to 5 April 2015.
For commercial properties: You can elect to rebase to 5 April 2019.
You may deduct certain costs, such as:
Legal and estate agent fees
Costs of improvement works (but not maintenance)
For individuals:
18% on the gain falling within the basic income tax band.
28% on gains falling into the higher or additional rate tax bands.
For companies:
Gains are generally taxed under the Corporation Tax regime (rate currently 25% for most companies in 2025).
Foreign investors must report the sale to HMRC within 60 days of completion.
Any CGT due must also be paid within 60 days.
Reporting is required even if no tax is owed (for example, if there is a loss or if exemptions apply).
Annual CGT Allowance: Foreign individuals may benefit from the UK’s CGT annual exempt amount (currently £3,000 in 2025), though it has been significantly reduced in recent years.
Principal Private Residence Relief (PPR): Very limited for non-residents unless specific conditions are met (e.g., at least 90 days of residence per year).
Double Tax Treaties: Some countries have treaties with the UK to prevent double taxation on the same gain. Relief may apply but requires careful planning.
Tax Planning Before Purchase: Choose appropriate ownership structures (individual vs. company).
Rebasing Elections: Take advantage of the rebasing rules where beneficial.
Timing Sales: Planning the timing of a sale to maximise use of available allowances.
Gifting to Family: Subject to careful inheritance tax (IHT) planning.
Use of Trusts or Offshore Structures: Complex but sometimes effective for wealthier investors (requires expert advice).
Fraser Bond works closely with trusted tax advisors to help investors structure their property portfolios efficiently and plan exits to minimise tax burdens.
Fraser Bond provides comprehensive support to foreign investors, including:
Pre-acquisition tax planning and advice
Guidance on CGT reporting and compliance
Strategic portfolio structuring for tax efficiency
Access to specialist legal and tax advisory services
Full end-to-end acquisition and resale management
Our expertise ensures that international investors can maximise their returns while fully complying with all UK tax obligations.
Capital Gains Tax is a critical consideration for any foreign investor selling UK property. With proper planning, understanding the rules, and working with experienced advisors like Fraser Bond, investors can manage their liabilities effectively and protect their investment returns. As tax regulations evolve, expert guidance becomes even more vital to achieve the best outcomes in the UK property market.
