Who is in charge, and the five year trap
UK CGT follows the person, not the property: GOV.UK confirms you pay CGT when you dispose of overseas property if you are resident in the UK. Disposal is wider than sale, so gifting the property to anyone other than your spouse or civil partner, or moving it into a company or trust, is also chargeable at market value. If you are non-resident, the sale of foreign property is outside UK CGT altogether, but two traps guard that rule: sell during a short spell abroad and return to the UK within five years of leaving and the gain can be taxed in your year of return under the temporary non-residence rules, and in the year of a move the timing of completion against your arrival or departure date can decide whether the gain is taxed at all. Our full guide to selling property abroad works through each situation.
The sterling computation and the exchange rate surprise
HMRC's Capital Gains Manual requires each element of the computation to be translated separately: acquisition cost and purchase costs at the exchange rate on the purchase date, proceeds and selling costs at the rate on the sale date, improvements at the rate when each amount was spent. Sterling's movement between the two dates is therefore part of the gain. Buy an apartment for 200,000 euros when the pound is strong and sell it for the same 200,000 euros when the pound is weaker, and you have a sterling gain and a UK tax bill on a property that never went up, usually with no foreign tax to credit because the local country sees no gain. The arithmetic can also run in your favour and produce an allowable loss where sterling strengthened, so run the numbers in both directions before assuming anything.
Reporting, foreign tax credit and the reliefs
The sale goes on the SA108 capital gains pages of your Self Assessment return, due with the tax by 31 January after the end of the tax year, and the SA106 foreign pages carry the claim for Foreign Tax Credit Relief. The credit is capped at the lower of the foreign tax on the gain and the UK tax on the same gain, computed gain by gain, so surplus foreign tax cannot shelter other disposals; the wider framework is in our guide to double tax relief. Two reliefs are worth checking before you accept any bill. Private residence relief can cover a foreign home that was genuinely your main residence, subject to a 90 day occupation test for years in which neither you nor your spouse or civil partner was tax resident in that country. And new arrivals within their first four UK tax years after ten consecutive non-resident years may relieve the whole foreign gain under the FIG regime, at the cost of that year's allowances, which makes timing completion into a claimable year one of the most valuable planning points in this area. Horizon prepares these computations, credit claims and relief positions on fixed fees agreed upfront, with complex cases from £750; book a free 30 minute clarity call before completion if you can.