Capital gains tax on overseas property: Tax guide (2025)

Selling property can be a good opportunity, but it also comes with important tax considerations, especially for UK residents. When you are selling property abroad and decide to bring the money to the UK, you may be liable to pay Capital Gains Tax (CGT) on any profit made from the sale. This tax applies not only to overseas property for sale but also to UK capital gains tax on foreign shares and other overseas assets.

Understanding how capital gains tax on overseas property sale works, the rules around double taxation, and how to report these transactions in the UK is crucial. In this guide, we will explain in simple terms what you need to know about selling a property abroad and the related CGT implications, helping you stay compliant and optimise your tax position.

What Is Capital Gains Tax on Overseas Property?

Capital Gains Tax is a tax on the profit made when you sell an asset for more than you bought it. This applies to overseas property for sale as well as UK properties. Even when selling a property abroad, UK residents may have to pay CGT on the gain when bringing money to the UK.

UK Capital Gains Tax Rates

When you sell an asset like property or shares, you may have to pay Capital Gains Tax (CGT) on the profit. The rate you pay depends on your total taxable income, the size of your capital gain, and the type of asset you’re selling.

If You Pay Basic Rate Income Tax

If you’re a basic rate taxpayer, your CGT rate will depend on how much of your gain falls within your remaining basic rate band after accounting for your taxable income. The rates are:

• 10% on gains from most assets (such as shares)
• 18% on gains from residential property

To work out what CGT rate applies:

1. Calculate your taxable income (income minus personal allowance and any income tax reliefs).

2. Work out your total capital gains.

3. Deduct the annual CGT allowance.

4. Add the remaining gain to your taxable income.

5. If the combined amount stays within the basic rate band, you’ll pay 10% or 18% depending on the asset.

6. Any part above the basic rate threshold is taxed at 20% or 28%.

If You Pay a Higher or Additional Rate Income Tax

If you’re a higher rate or additional rate taxpayer, you’ll pay:

• 28% on gains from residential property
• 20% on gains from other chargeable assets (such as shares or commercial property)

These rates apply to the full gain after deducting your CGT allowance.

Double Taxation and Selling a Property Abroad

When selling a property abroad, you might face capital gains tax both in the country where the property is located and in the UK. However, the UK has double taxation agreements (DTAs) with many countries to avoid you paying tax twice on the same gain. These agreements either:

• Give exclusive taxing rights to the country where the property is located, or
• Allow tax relief to offset tax paid abroad against the UK CGT liability.

If your overseas property sale country has a DTA with the UK, you can usually claim relief to reduce your UK capital gains tax bill.

Reporting and Paying CGT on Overseas Property Sale

When selling property abroad and bringing money to the UK, you must report any capital gains on your Self Assessment tax return by 31 January following the tax year the sale occurred. Unlike UK residential property sales, which require reporting within 60 days, overseas property gains are reported through Self Assessment.

Tips for Selling Property Abroad UK Residents Should Know

• Keep detailed records of your purchase and sale transactions, including costs and currency exchange rates.
• Check if the country where your overseas property is located charges local capital gains tax, and understand how the UK DTA applies.
• If you are selling a property abroad and bringing money to the UK, be aware of potential tax reporting requirements to avoid penalties.
• Consult with a tax professional experienced in international property sales to optimise your tax position.

Conclusion

Selling a property abroad can be financially rewarding but comes with important tax considerations. UK residents need to understand capital gains tax on overseas property sales to ensure compliance and efficient tax planning. Whether you are selling overseas property for sale or foreign shares, accurate reporting and knowledge of applicable tax will help you manage your tax liability effectively.

For personalised advice on capital gains tax on overseas property here at dns accountants, we have a fully qualified tax team who team with tax challenges such as Capital Gains Tax across the globe. If you would like to know more about how we can help with the CGT on overseas property sales, contact dns accountants.

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