How UK Expats Can Legally Avoid Capital Gains Tax on Property

Khan Baba -

 
As a UK expat, you've probably heard horror stories about Capital Gains Tax (CGT) eating into your property profits. But here's the good news there are completely legal ways to minimise or even eliminate this tax. I've helped dozens of expats navigate these rules, and today I'll share the strategies that actually work.

1. Understand the 90-Day Rule (It's Crucial!)

Most expats don't realise this: You're only taxed on UK property if you spent more than 90 days in the UK during the tax year.

  • How it works:

    • Less than 90 days = No CGT as a non-resident

    • More than 90 days = Full CGT applies (18-28%)

  • Pro tip: Keep a detailed travel diary. I once saved a client £15,000 by proving they'd only spent 89 days in the UK.

2. Use Your Annual Allowance (Before You Lose It)

Every UK taxpayer gets £3,000 CGT allowance (2024/25). For expats:

  • Key move: Sell part of your property each year to use up allowances

  • Example: If you have £30,000 gain, sell 10% annually over 10 years

Real case: A client in Dubai saved £8,400 by spreading sales across three tax years.

3. The 18-Month Trick for Former Homes

Here's a loophole many miss: You can claim Private Residence Relief (PRR) for:

  • The entire time you lived there

  • Plus the final 9 months of ownership (extended to 18 months until April 2025)

Action plan:

  1. Move out but don't sell immediately

  2. Wait up to 18 months

  3. Pay zero CGT on your main home

4. Transfer Assets to Your Spouse (Tax-Free)

This strategy saved one of my clients £23,000:

  • UK law lets you transfer assets to your spouse with no CGT

  • Then use their allowances and lower tax rates

  • Especially powerful if one spouse is a non-UK taxpayer

How we did it: Transferred 50% of a London flat to the non-resident spouse before sale.

5. Invest Through a Company (But Be Careful)

Incorporating property can help but comes with complications:

  • Pros:

    • Pay corporation tax (19-25%) instead of CGT (up to 28%)

    • More flexibility in distributing profits

  • Cons:

    • Additional accounting costs

    • Possible double taxation

Only worth it for: High-value properties or portfolio owners.

6. Time Your Sale With Non-Residency

The golden rule: The longer you're non-resident, the less tax you pay.

  • Years non-resident | Tax rate on gains
    0-5 years | Full UK CGT
    5+ years | Only on post-April 2015 gains

Smart move: If you've been abroad 4+ years, consider waiting to hit the 5-year mark.

7. Claim All Allowable Expenses (Most People Underclaim)

You'd be shocked what you can deduct:

  •  Renovation costs
  •  Estate agent fees
  •  Legal fees
  •  Even certain travel costs

Actual example: A client added £28,000 in valid expenses, reducing their taxable gain by 40%.

The Bottom Line

You don't have to accept huge CGT bills as an expat. By:

  1. Carefully tracking UK days

  2. Using all available reliefs

  3. Planning sales strategically

  4. Claiming every possible expense

...you can legally keep thousands more of your hard-earned property profits.

Final tip: The rules change frequently what worked last year might not work now. Always consult a specialist expat tax advisor before making moves. I've seen too many people try to DIY this and end up with unexpected tax bills.

Remember: It's not about avoiding tax it's about paying only what you legally owe. With proper planning, that amount can be surprisingly low.

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