Selling overseas property: What UK taxpayers need to consider

If you are considering selling, transferring or gifting overseas property, it is important to understand the potential UK tax implications before taking action.

Many overseas properties have been held within families for years and may carry both financial and emotional significance. However, even where the property is located abroad, there can still be important UK reporting and tax considerations depending on your circumstances. With HMRC increasingly exchanging information with countries around the world, they are becoming more aware of taxable transactions worldwide.

Taking advice early can help you understand what tax may arise, what reporting obligations apply and what planning opportunities may be available.

It also allows time to consider the wider financial implications of a sale, including how proceeds may be invested, gifted or used as part of longer-term retirement or succession planning. The below focuses on the Capital Gains Tax (CGT) point of view but there are also Inheritance Tax planning opportunities and considerations that go hand in hand.

A chargeable disposal of property is subject to CGT. This can include a sale of the property, but also a gift or sale below the market value to a connected party. As a general rule, if you are UK tax resident, you are liable to pay CGT on worldwide gains, including profits from disposing of property abroad. This applies to all forms of property, including rentals and holiday homes.

If you are not resident (either permanently or temporarily), you may not be liable to UK CGT on the property if certain conditions are met. As these vary per each individual’s circumstances, it is vital to obtain professional advice to ensure you are compliant with reporting requirements.

The capital gain is generally calculated based on the difference between the sale price (or market value if sold / disposed of to a connected person), minus the purchase price, allowable costs and allowances. Depending on the use of the property during its ownership, certain tax reliefs may also be available.

When calculating your gain, proceeds and costs need to be converted from the local currency using exchange rates at the time the amount is incurred/received. This may result in a very different gain or loss from that calculated in the local currency.

The net chargeable gain is then taxed at the current rates which are as follows:

• 18% for basic-rate taxpayers
• 24% for higher-rate taxpayers

Or a combination of both, depending on level of income and chargeable gains.

You must report and pay CGT on overseas property by 31 January following the end of the tax year in which the sale occurred. Although this may be some time after the disposal, it is beneficial to calculate the tax due as early as possible, to enable you to fully understand what liability is due and to be able to decide on what to do next with the net funds. Alternatively, if you are gifting the property, this will provide more time to ensure you have the cash available to cover the tax charge. For example, a property disposal in October 2026 (2026/27 tax year) would have a payment deadline of 31 January 2028.

Double Tax Agreements (DTAs) help ensure that individuals are not taxed twice on the same transaction when that transaction may be taxable in more than one country. These DTAs vary per country and scenario and it is important to seek advice on what reliefs may apply to avoid paying tax twice.

• Plan ahead: Consider the timing of your sale to manage tax rates, allowances and reliefs, and also exchange rates.
• Keep receipts: For all improvement costs and parts of the buying and selling process.
• Seek joined-up advice: Cross-border transactions often involve tax, financial planning and succession considerations, meaning coordinated advice can be valuable. Selling overseas property is rarely just a financial transaction. Many properties have long-standing family connections, future retirement plans attached to them or form part of wider succession planning.

With the right advice and early planning, it is possible to stay compliant, reduce unexpected tax issues and make informed decisions about what happens next.

At Old Mill, our Tax and Wealth Management teams work together to help clients manage both the tax implications of overseas property disposals and the wider financial planning considerations that follow.

If you are considering selling, gifting or transferring overseas property, please speak to your usual Old Mill adviser or contact Dan Wilton to discuss your circumstances.