What are the tax rules for non-UK residents selling shares?

When selling shares held in a UK company, you normally pay Capital Gains Tax (CGT) on any profit you make from the sale. However, the rules are different for non-UK residents. On the disposal of UK shares, your gains are only liable to CGT if you return to the UK within five years of moving abroad, or if you sell shares in a company that is ‘UK-property rich’. 

In this post, we discuss the circumstances under which non-UK residents selling shares may be required to pay Capital Gains Tax. We also explain how to report any gains on the disposal of shares to HM Revenue & Customs (HMRC).

Do non-UK residents pay tax when selling shares?

Individuals who are non-UK residents for tax purposes usually pay Capital Gains Tax on the profit (gains) they make from selling or ‘disposing of’ UK property and land. This includes:

• residential UK property or land, including any buildings on the land
• non-residential UK property or land
• ‘mixed-use’ property – this is a property that has both residential and non-residential elements
• rights to assets that derive at least 75% of their value from UK land

However, non-residents don’t pay CGT on other types of UK assets, such as shares in UK companies, unless either of the following applies:

• you return to the UK within five years of leaving
• you sell shares in a company that is ‘UK property rich’ and you meet the conditions for an indirect disposal

In both situations, you must report and pay Capital Gains Tax to HMRC on any gains you make on the disposal of your UK shares. The ‘gain’ is normally the difference between what you paid for the shares and what you sold them for.

• An introduction to Capital Gains Tax for small businesses

Typically, basic-rate taxpayers pay Capital Gains Tax on shares at a rate of 10% (or 18% for disposals made on or after 30 October 2024).

Any gains above the basic tax band attract a higher rate of 20% (or 24% for disposals made on or after 30 October 2024).

If you are a higher-rate or additional-rate taxpayer, you’ll pay the higher rate of CGT on the entire gain.

However, when selling shares, you may be able to claim Business Asset Disposal Relief (formerly Entrepreneurs’ Relief). This would allow you to pay a reduced rate of 10% on all eligible gains in the 2024-25 tax year.

Non-UK residents whose disposals fall outside the scope of UK tax may be liable to tax in their country of residence instead. In this situation, you should seek professional advice locally.

When returning to the UK within five years

If you move back to the UK after living overseas for a period of time, you normally become a UK resident again for tax purposes.

Under the temporary non-residence rules, you may have to pay UK tax on certain income or gains (but not wages or other employment income) you made while non-resident if:

• you return to the UK within 5 years of leaving, and
• you were a UK resident in at least 4 of the 7 tax years before moving abroad

Where both of these apply, any profit you made on the disposal of UK shares during your period of non-residence will be liable to Capital Gains Tax. The gain becomes chargeable to CGT in the tax year of your return to the UK, rather than the year of non-residence in which the gain actually occurred (if different).  

If you are abroad for less than a full tax year, you remain a UK resident. In this situation, you normally pay UK tax on foreign income for the entire time you are away. Therefore, if you sell UK shares during that period, the gain is chargeable to CGT in the tax year it arises.

Reporting and paying Capital Gains Tax

When you move back to the UK, you must report and pay Capital Gains Tax in a Self Assessment tax return or (if eligible) using HMRC’s ‘real time’ Capital Gains Tax service. Before doing so, you need to work out your total taxable gains by:

1. working out the gain you made from selling shares
2. adding together the gains from each disposal (if more than one)
3. deducting any allowable losses

You will pay CGT on any taxable gains you made above your annual Capital Gains Tax allowance. This is currently £3,000 for the 2024-25 tax year.

The deadline for reporting the gains in your Self Assessment tax return is 31 January after the end of the tax year in which your UK residency resumes. You must pay any CGT you owe by the same deadline.

If you use the ‘real time’ Capital Gains Tax service, you must report your gains to HMRC by 31 December after the end of the tax in which your UK residency resumes. You must pay any tax that you owe by 31 January (i.e. the following month).

When selling shares in a company that is UK property-rich

A UK property-rich company is a company that derives 75% or more of its gross asset value from UK land. 

When a non-resident person sells shares in a UK property-rich company in which they currently hold (or held at some point in the two years before the time of disposal) an interest of at least 25%, they are deemed to have made an ‘indirect disposal’ of UK land.

When working out if a person owns an investment of at least 25%, and thus a ‘substantial indirect interest in UK land‘, interests held by ‘connected persons’ (such as spouses, civil partners, and certain descendants) are also considered.

• Rules and restrictions on share transfers in a private limited company

The scope of non-resident Capital Gains Tax was extended on 6 April 2019 to cover such indirect disposals. Therefore, if you are a non-resident individual, you may fall within the scope of this CGT charge when selling shares in a company that is UK property-rich.

However, indirect disposals are not applicable when:

• the land used in a continuing trade is also disposed of
• two or more companies are sold at the same time by the same investors, and the ‘property richness test’ would not apply if the disposals were treated as a single transaction

Any gains you make on an indirect disposal are based on the current value of the shares you dispose of, rather than the value of the underlying UK property or land.

Reporting and paying Capital Gains Tax

You must report indirect disposals to HMRC (and pay any tax due) within 60 days of completion of the disposal. This is required even if you have no tax to pay or you’ve made a loss.

To do so, you need to create an online ‘Capital Gains Tax on UK property’ account using your Government Gateway user ID and password. If you don’t have sign-in details, you can create them when you register for the service.

You will need the following information to complete the online return:

• name and address of the company in which the shares were held
• how you disposed of the shares (e.g. sold them, gave them away)
• your country of residence on the day you ‘exchanged’ contracts with the new shareholder
• date of disposal of the shares
• how much you sold them for
• additional costs incurred when disposing of the shares (e.g broker’s fees)
• date you acquired the shares
• how you acquired them (e.g. purchased, inherited, gifted)
• value of the shares when you got them
• additional costs incurred when you got the shares (e.g. broker’s fees or Stamp Duty Reserve Tax)
• details of any losses, tax reliefs, allowances, or exemptions
• your Capital Gains Tax liability so far this tax year

You’ll have the option to upload two documents as supporting evidence, such as invoices, receipts, valuations, or spreadsheets with calculations.

It’s possible to include more than one indirect disposal in the same return if:

• you were a non-resident on the disposal date
• the shares all have the same sale or disposal date

HMRC provides detailed guidance on working out your Capital Gains Tax if you’re a non-resident making indirect disposals of UK property or land.

If you’re unable to report online

If you can’t use HMRC’s online service for any reason, you can report indirect disposals by post using a Capital Gains Tax on UK property form.

Afterwards, HMRC will send you a 14-digit payment reference number starting with ‘x’. You will need this reference number to pay any Capital Gains Tax you owe before the deadline.

After reporting your disposal of shares to HMRC

Non-UK residents must also include details of capital gains made on indirect disposals in their Self Assessment tax returns. To do so, you need to complete the Capital Gains Tax summary pages (form SA108) of your tax return.

• How to register for Self Assessment

When filling in these pages, you must provide details of your non-resident Capital Gains Tax on indirect disposals in boxes 52.2 to 52.5. You should already have the non-resident capital gains or losses figures from the Capital Gains Tax on UK Property Disposal return.

In the additional information section at the end of the form, you should enter:

You can complete and file your Self Assessment tax return online. It must reach HMRC by 31 January following the end of the tax year in which the indirect disposal took place.

Working out if you are a UK resident for tax purposes

If you are unsure of your residency status, it’s important to work this out before making any disposals that may attract a Capital Gains Tax charge. 

Under the Statutory Residence Test (SRT), you are likely to be treated as a UK resident for tax purposes if:

• you spend at least 183 days in the UK in the tax year
• your only home is in the UK for at least 91 days in a row, and you visited or stayed in that home for at least 30 days of the tax year
• you work in the UK full-time for any period of 365 days

Even if you don’t satisfy these conditions, you may still be treated as a UK resident under the sufficient ties test. This depends on the amount of time you spend in the UK and the number of additional ties you have here (i.e. work or family).

You are ordinarily a non-UK resident for tax purposes if either of the following applies:

• you spend fewer than 16 days in the UK (or 46 days if you have not been a UK resident for the 3 previous tax years)
• you work overseas full-time and spend fewer than 91 days in the UK, of which no more than 30 are spent working

If you are still unsure, you can use HMRC’s residence status checker or refer to the official guidance on the Statutory Residence Test.

Thanks for reading

Broadly, the tax rules for non-UK residents selling shares held in UK companies are simple. You are only liable to pay Capital Gains Tax on profit made on the disposal of shares if you return to the UK within 5 years of leaving, or when selling substantial shareholdings in a UK property-rich company.

However, working out your tax residence and the scope of CGT can be challenging in certain situations, particularly if you are temporarily non-resident for tax purposes. You should seek professional advice from an accountant if your situation is complex.