Selling Property Abroad as a UK Resident: How UK Capital Gains Tax Really Works

UK Capital Gains Tax follows the person, not the property. GOV.UK puts it plainly: you pay CGT when you dispose of overseas property if you are resident in the UK (Tax when you sell property: selling overseas property, GOV.UK). Disposal is wider than sale: gifting the property to anyone other than your spouse or civil partner, or transferring it into a company or trust, is also a disposal, with the gain computed on the property's market value (Capital Gains Tax: gifts, GOV.UK); our guide to CGT on gifts and family transfers covers that ground.

If you are not UK resident, the sale of a foreign property is outside UK CGT altogether; the UK only pursues non-residents on UK land. But two traps sit either side of that simple rule. First, the five-year temporary non-residence rule: sell the overseas property during a short spell abroad and return to the UK within five years of leaving, and the gain can come back into charge in your year of return (GOV.UK). Second, the year you move: residence is decided year by year under the Statutory Residence Test, and in a split year the timing of completion against your arrival or departure date can decide whether the gain is taxed at all. If a sale and a move are both in prospect, sequence them deliberately.

The rule that catches almost everyone is the currency translation. You do not compute the gain in the local currency and convert the answer. HMRC's Capital Gains Manual requires each element to be translated separately: the acquisition cost is the sterling equivalent of the foreign currency paid at the exchange rate in force at the date of acquisition, and the disposal proceeds are the sterling equivalent at the rate in force at the date of disposal (CG78310, HMRC). Purchase costs are translated at the purchase-date rate, selling costs at the sale-date rate, and improvement expenditure at the rate when each amount was spent.

The consequence: sterling's movement between your two dates is itself part of the gain. Suppose you bought a holiday apartment for €200,000 when £1 bought €1.40, a cost of £142,857, and sold it years later for exactly €200,000 when £1 bought €1.15, proceeds of £173,913. In euros you made nothing. In sterling you made £31,056, and after the £3,000 annual exempt amount a higher rate taxpayer would owe roughly £6,733 at 24% on a property that never went up. And because the local country sees no gain, there is usually no foreign tax to credit against the UK bill. The rates in this paragraph and the example below are illustrative round numbers; for a real computation you use the actual rates for your own dates, and HMRC expects a reasonable and consistent method for choosing the reference rate (CG78310, HMRC).

The same arithmetic can work in your favour. If sterling strengthened between purchase and sale, the sterling gain shrinks, and the computation can produce an allowable loss even where the local price rose. Run the numbers before you assume anything, in either direction.

Take a UK resident higher rate taxpayer who bought a Spanish apartment in June 2015 for €250,000 with €5,600 of purchase costs, when £1 bought €1.40, and sells it in May 2026 for €300,000 with €5,750 of selling costs, when £1 buys €1.15. Illustrative rates, real method.

Notice the gap. The local gain is €38,650, worth about £33,600 at the sale-date rate. The UK taxable computation produces £73,299, more than double, because sterling weakened across the ownership period and the translation rule turns that currency movement into chargeable gain. If Spanish tax equivalent to £7,300 was paid on the local gain, the UK gives credit for it in full, since it is lower than the £16,872 of UK tax on the same gain, leaving £9,572 payable in the UK. The two computations will almost never match: the local country taxes its own gain under its own rules, and the UK taxes the sterling gain under HMRC's.

For 2026/27 the annual exempt amount is £3,000. Gains above it are taxed at 18% to the extent they fit within your unused basic rate income tax band and 24% above that; higher and additional rate taxpayers pay 24% on the lot (Capital Gains Tax rates, GOV.UK). The gain stacks on top of your taxable income, so a large property gain will usually push most of itself into the 24% band even for a modest earner. Spouses and civil partners each have their own £3,000 exemption and their own bands, which is one reason jointly held foreign property often produces a lower combined bill than a property in one name.

The 60-day capital gains return that dominates UK property sales does not apply here. GOV.UK's rule is that you must report and pay CGT on most sales of UK property within 60 days (Tax when you sell property, GOV.UK); our 60-day rule guide covers that regime. A foreign property is not UK property, so the sale is reported through Self Assessment instead: the gain goes on the SA108 capital gains summary pages, and the SA106 foreign pages carry the claim for Foreign Tax Credit Relief on the overseas tax (Self Assessment: Foreign (SA106), GOV.UK).

That gives you longer to pay, but not less to do. A sale completing in 2026/27 goes on the return due, with the tax, by 31 January 2028. If you are not already in Self Assessment you must register, and if you have been letting the property, the rental income should already have been on your returns; if it has not, deal with the disclosure before HMRC's data-matching deals with it for you, as our guide to foreign rental income explains. Keep the contemporaneous evidence: completion statements for both ends, invoices for improvement works, and the exchange rates used for each translation, because every figure in the computation depends on them.

You may well pay tax in the country where the property sits; most double taxation agreements leave that country free to tax gains on its own land, and the UK then relieves the double charge. Relief is given under the terms of the agreement, or unilaterally where there is none, and it works as a credit: the foreign tax is set against the UK CGT on the same gain, capped at the lower of the foreign tax charged on the gain and the UK tax on the doubly taxed part of it (HS261, GOV.UK).

Three consequences follow. If the foreign tax is smaller than the UK tax, you pay the difference to HMRC, as in the worked example above. If the foreign tax is larger, the excess is simply lost: HS261 is explicit that relief is calculated gain by gain, so surplus foreign tax on one disposal cannot shelter UK tax on another. And where no UK tax arises at all, for example because the sterling computation produces a loss, there is nothing to credit against; in that case the alternative of deducting the foreign tax in computing the gain or loss is usually the better route (HS261, GOV.UK). Our guide to double tax relief covers the wider framework, and for US real estate, with its own withholding regime, see selling US property as a UK resident.

If the foreign property was genuinely your home, private residence relief is available in principle: HMRC's helpsheet confirms that a home outside the UK may still qualify (HS283, GOV.UK). The years you lived in it as your only or main residence are relieved, the final nine months of ownership are relieved regardless of use, and where you had two residences at once you could nominate which counted, within two years of the combination arising.

The catch, since 6 April 2015, is the day count. For any tax year in which neither you nor your spouse or civil partner was tax resident in the country where the property sits, the property is treated as not being your residence for that year unless you clock at least 90 days of occupation there in the year, counting nights spent in the property and aggregating stays across qualifying homes in the same country and days spent there by your spouse (CG64582, HMRC). The threshold is pro-rated if you owned the property for only part of the year. In practice that means the years you actually lived abroad in the home are usually fine, and the later years of UK residence with fortnight holidays in the property are not. The relief then works as a fraction: qualifying years plus the final nine months, over the total period of ownership, applied to the sterling gain.

If you moved to the UK recently, check the four-year FIG regime before accepting any UK tax on the sale. A qualifying new resident, someone in their first four UK tax years after at least ten consecutive non-resident years, can claim relief on foreign capital gains, and a gain on overseas property is exactly that (GOV.UK). The claim is made on your Self Assessment return for each year separately, a claim for one year does not carry into the next, and the amount relieved must be quantified (RFIG42100, HMRC). It also has a price: claiming costs your income tax personal allowance and your CGT annual exempt amount for that year. For a five or six figure property gain the trade is usually overwhelmingly worth it, which makes timing the completion date into a claimable year one of the most valuable planning points in this whole area.

The old remittance basis still matters for older money. Before 6 April 2025, non-domiciled residents using the remittance basis were taxed on foreign gains only when the proceeds were brought to the UK, and gains that arose in those years remain taxable on remittance under the old rules. The Temporary Repatriation Facility runs for 2025/26, 2026/27 and 2027/28 and lets former remittance basis users designate that pre-6 April 2025 foreign income and gains at a reduced rate, after which the money moves freely (RDRM71000, HMRC). If you sold a foreign property in a remittance basis year and the proceeds are still offshore, take advice before touching them: the designation window is finite and the old remittance rules are unforgiving.

Budget for the other country's system as well as HMRC's. Most countries tax gains on their own real estate, and many apply withholding to non-resident sellers, taking a slice of the gross price at completion and settling up later. Local rules rarely mirror the UK's: some countries index the cost for inflation, some taper the gain with ownership length, some exempt a main home on different conditions, and all of them compute in their own currency, which is why the local gain and the UK gain rarely match. Notary, agent and legal fees are deductible in the UK computation, translated at the rate on the date incurred.

Watch the timing mismatch too. Local tax is often payable at or shortly after completion, while the UK bill falls due the following 31 January; you claim credit on the SA106 for the foreign tax properly charged on the gain, so keep the foreign assessment or withholding certificate as evidence. If a local refund later arrives because a treaty or local relief reduced the charge, the UK credit has to be corrected to match what you finally bore. None of this changes the UK computation itself; it changes the cash flow and the paperwork, and both are worth planning before completion rather than after.

This is bread and butter work for us: the sterling computation with the exchange-rate evidence behind every figure, private residence relief tested year by year against the 90-day rule, the foreign tax credit claimed properly on the SA106, and the FIG or remittance position checked before anything is filed. Where a move is in prospect we plan the completion date against your residence position first, because the sequencing is often worth more than everything else combined.

We are Chartered Tax Advisers working on fixed fees agreed upfront: personal tax returns from £350, non-resident and expat returns from £550, and complex cases, which foreign property computations with credit relief usually are, from £750. If you have sold, or are about to sell, a property abroad, book a free 30-minute clarity call or see our Self Assessment service. You will know the fee before we start, and the computation will stand up if HMRC ever asks how the numbers were built.