UK Capital Gains Tax on Offshore Assets: Residents, Non-Residents, and the Post-2019 Rules

UK CGT: The Basic Scope

Capital gains tax in the United Kingdom is charged under the Taxation of Chargeable Gains Act 1992 (TCGA 1992). Section 1 TCGA 1992 establishes the fundamental principle: a person who is UK resident is chargeable to CGT on chargeable gains accruing in the tax year from the disposal of assets anywhere in the world.

UK resident individuals pay CGT on gains arising on disposals of:

• UK real estate (residential and commercial)
• UK shares and securities
• Foreign real estate (since 1997 for non-doms on remittance basis; for all UK residents on arising basis)
• Foreign shares and securities
• Crypto assets, NFTs, and other intangibles
• Personal property (chattel) with proceeds above £6,000

The CGT rates for 2025/26:

• Residential property: 18% (basic rate), 24% (higher rate)
• All other assets (shares, non-residential property, crypto): 18% (basic rate), 24% (higher rate)
• Business Asset Disposal Relief qualifying disposals: 14% (rising to 18% from April 2026)
• Carried interest: 28% (until April 2026 when it becomes income tax)

The Annual Exempt Amount: £3,000

The annual exempt amount (AEA) was £12,300 as recently as 2022/23. The Finance (No.3) Act 2023 reduced it to £6,000 for 2023/24 and £3,000 from 2024/25 onwards. This is a dramatic reduction that brings far more individuals within the CGT reporting and payment system.

At £3,000, the AEA is approximately 27% of the minimum wage on a full-time basis — it provides meaningful relief only for very small gains. Most non-trivial asset disposals will exceed the AEA and trigger a CGT reporting obligation.

Reporting Threshold

CGT must be reported and paid via:

1. UK residential property disposals by UK residents: Via the 60-day CGT return (PPDCGT return) due within 60 days of completion
2. All other disposals (including overseas assets): Via the self-assessment tax return for the relevant tax year

The reporting threshold: if total disposal proceeds exceed four times the AEA (£12,000 for 2025/26), a self-assessment return must be filed even if no tax is due.

Non-Resident CGT: UK Property

Non-UK residents are not subject to UK CGT on most assets. However, specific provisions extend UK CGT to:

UK Residential Property (Post-April 2015)

Section 1B TCGA 1992 (inserted by Finance Act 2015) subjects non-UK residents to CGT on gains arising on the disposal of UK residential property. The charge applies only to gains arising from April 2015 (re-basing is available for pre-2015 gains).

For non-resident individuals, the CGT rates on UK residential property are 18% (basic rate equivalent) and 24% (higher rate equivalent), the same as for UK residents.

UK Commercial Property (Post-April 2019)

Finance Act 2019 extended the non-resident CGT (NRCGT) charge to UK commercial property and UK land, with effect from 6 April 2019. Non-residents disposing of UK commercial buildings, development land, or other UK real estate must report and pay CGT within 60 days of completion.

Indirect Holdings: The "Property-Rich" Test

Finance Act 2019 also introduced the "property-rich" test for non-resident disposals of shares and interests in entities that are "UK property-rich." An entity is UK property-rich if 75% or more of its gross asset value consists of UK land.

A non-resident who sells shares in a company that is 80% UK real estate (by gross asset value) is disposing of an interest in a UK property-rich entity. The gain attributable to the UK land value is subject to NRCGT.

This provision catches many offshore fund structures that hold UK real estate — the investor's disposal of their fund interest is within NRCGT scope if the fund is UK property-rich.

Disposal Type	UK Resident	Non-UK Resident
UK residential property	CGT — standard rates	NRCGT since April 2015
UK commercial property	CGT — standard rates	NRCGT since April 2019
UK shares (non-property co.)	CGT — standard rates	No UK CGT
Shares in UK property-rich co.	CGT — standard rates	NRCGT since April 2019
Foreign property	CGT — standard rates	No UK CGT
Foreign shares	CGT — standard rates	No UK CGT

The Annual Exempt Amount vs Offshore Assets

For UK residents with offshore portfolios, the reduction in the AEA to £3,000 creates a significant compliance burden. An investor with a diversified offshore stock portfolio making modest regular rebalancing transactions — selling 2-3 positions per year with aggregate proceeds of £30,000-£50,000 — will almost certainly generate gains above £3,000 and must file a self-assessment return.

The CGT pooling rules (Section 104 TCGA 1992) apply to offshore shares of the same class and issuer just as they do to UK shares. Each foreign company's shares are maintained in a separate Section 104 pool. The same-day rule and 30-day rule apply to foreign shares in the same way as to UK shares.

Income Tax Anti-Avoidance: Section 104 and Transfer of Assets Abroad

A significant and often overlooked interaction exists between CGT on offshore assets and the UK's income tax anti-avoidance legislation.

Sections 714-751 ITA 2007 (the "transfer of assets abroad" legislation) attribute income of offshore persons to UK individuals who have transferred assets abroad in circumstances where the offshore person has power to enjoy the income. Where this legislation applies, what might appear to be a capital gain in the offshore entity — which would generate only a CGT charge on distribution to the UK individual — is reclassified as income attributable to the individual.

The classic example: a UK individual establishes an offshore company, transfers a portfolio of shares to it, and the company earns dividends and then realises a large capital gain on selling one of its holdings. Without the transfer of assets abroad rules, the UK individual is taxed on dividends received from the offshore company when distributed (as income), and on any gain on the shares of the offshore company when it is eventually wound up (as CGT). With the transfer of assets abroad rules, the income of the offshore company is attributed directly to the UK individual as income in the year it arises in the company — converting what would have been a future CGT event into current income tax at up to 45%.

The transfer of assets abroad rules have always been broadly drafted, but HMRC's increased focus on offshore compliance — combined with CRS data identifying UK individuals with offshore company structures — has made this a higher-risk area in recent years.

Principal Private Residence Relief

The principal private residence (PPR) relief under Section 222 TCGA 1992 exempts the gain on the disposal of a UK resident's main home from CGT. The PPR can also apply to a foreign property — TCGA 1992 does not limit PPR to UK properties.

A UK resident who owns a villa in France and lives in it as their main residence for the relevant period can claim PPR on the French property. The gain arising from the period of main residence is exempt; gains from other periods are chargeable. The "last 9 months" rule (extended from the previous 18 months) means that PPR is also available for the final 9 months before a qualifying disposal, even if the individual is no longer in residence.

HPT Group advises UK-resident individuals with overseas investment portfolios, property holdings, and offshore company structures on CGT planning, annual compliance, and the interaction of CGT with the income tax anti-avoidance regime. With the AEA now at £3,000, even relatively modest disposals require attention to the CGT position and reporting obligations. Contact our private client tax team or apply for a portfolio review.