Advanced Taxation (UK) · Capital gains tax: the scope of the taxation of capital gains

Residence, Domicile and Overseas Aspects of CGT for ACCA ATX

Updated 11 October 2026

UK residents pay capital gains tax on worldwide gains. Non-residents are generally outside CGT, except on UK land and property. Temporary non-residence rules can tax gains on other assets in the year you return, if you were away for five years or less. Check residence first, then asset type, then timing.

Understand Residence, Domicile and Overseas Aspects of CGT

CGT follows your residence. If you are UK resident in a tax year, you are taxable on gains from disposing of assets anywhere in the world. The location of the asset does not matter. You use the statutory residence test to decide residence. The test uses days in the UK and UK ties, as set out in the tax tables ACCA gives you.

If you are not UK resident, the starting point is the opposite. You are generally not liable to UK CGT, even on UK assets. The main exception is UK land and property. Non-residents are chargeable on disposals of UK land, including UK residential property and, in the right circumstances, indirect disposals such as interests in property-rich companies. Once the gain is chargeable, the usual computation applies. You use the rates and annual exempt amount in the tax tables.

The second exception is temporary non-residence. This is an anti-avoidance rule. Someone who has been UK resident, leaves, sells assets while abroad and then comes back soon would otherwise escape tax. The rule applies only if the person was UK resident for at least four of the seven tax years before leaving, and the period of non-residence is five years or less, measured from the date of departure to the date of return. If both conditions are met, gains on assets acquired before leaving and sold while away are taxed in the year of return. Assets bought and sold entirely during the absence are generally outside the rule. UK land gains are not caught by this rule either, because they are already chargeable while the person is non-resident.

The remittance basis was abolished from 6 April 2025 for both income and gains. A UK resident is taxed on worldwide gains as they arise, whether or not the proceeds are brought to the UK. The one relief is the foreign income and gains (FIG) regime. It is available by claim to a person who was non-resident for the ten tax years before becoming UK resident. If the claim is made, it covers their first four tax years of UK residence and exempts foreign gains for those years. Eligibility turns on that residence history, not on domicile. Domicile and deemed domicile are covered on their own page. In an exam, read the question for what it says about the client's status and use that. Do not assume a status that the facts do not give you.

Overseas gains can also suffer foreign tax. Double tax relief is then considered. Where a treaty or unilateral relief applies, you normally give a credit for foreign tax, limited to the UK tax on the same gain.

Key rules to remember

UK resident individual: Chargeable to CGT on worldwide gains; Applies for any tax year in which the person is UK resident under the statutory residence test. The location of the asset is irrelevant.
Non-resident individual: Generally not chargeable to UK CGT, except on UK land and property; Gains on UK land, including UK residential property, are within the charge even if the person is non-resident. Check for indirect disposals too.
Statutory residence test: automatic non-resident: Fewer than 16 days in the UK = automatically not resident; This applies to both previously resident and not previously resident individuals, per the tax tables.
Statutory residence test: automatic resident: 183 or more days in the UK = automatically resident; Other day bands depend on UK ties and whether the person was previously resident.
Temporary non-residence: UK resident for at least 4 of the 7 tax years before leaving, and non-resident for 5 years or less from departure to return: gains on assets acquired before leaving and sold while away are taxed in the year of return; Both the residence history condition and the five-year condition must be met. Assets acquired during the absence are generally outside the rule. UK land gains are already chargeable, so the rule is not needed for them.
CGT rates and annual exempt amount: 18% lower rate, 24% higher rate, annual exempt amount £3,000; From the tax tables. Business asset disposal relief and investors' relief are charged at 14% on gains within the £1,000,000 lifetime limit.

How to solve Residence, Domicile and Overseas Aspects of CGT questions

Use the same order for every question. It stops you missing the residence trigger or the UK property exception.

1Establish the person's residence status for the tax year of disposal. Use days in the UK, previous residence and UK ties from the statutory residence test table.
2If UK resident, treat the worldwide gain as chargeable. The remittance basis was abolished from 6 April 2025, so do not limit foreign gains to amounts brought to the UK. Only exempt foreign gains under the foreign income and gains regime if the facts show a qualifying new resident within their first four tax years of UK residence.
3If not UK resident, identify the asset. Is it UK land or property, or an interest that derives its value from it? If not, no UK CGT unless temporary non-residence applies.
4Test for temporary non-residence. Was the person UK resident for at least four of the seven tax years before leaving? Is the period abroad, from departure to return, five years or less? Was the asset acquired before leaving, rather than during the absence?
5Compute the gain in the normal way. Deduct allowable costs, then apply losses and the annual exempt amount. Use the correct rates from the tax tables.
6Consider double tax relief for any foreign tax suffered on the same gain, limited to the UK tax on that gain.
7State the tax year in which the gain is taxed and any reporting or payment point. Then give advice or planning points that fit the scenario.

Quickest way: Three-question residence filter

When to use it: Use this when a scenario mixes a move abroad, several assets and a return to the UK, and you must decide quickly what is taxable.

Ask: was the person UK resident in the year of disposal? If yes, the gain is taxable worldwide.
If no, ask: is it UK land or property? If yes, taxable. If no, move on.
Ask: was the person UK resident for at least four of the seven tax years before leaving, did they return within five years, and did they own the asset before leaving? If yes to all, taxable in the year of return. Otherwise no UK CGT.
Only then compute the gain and apply rates, using the tables.

Common mistakes in Residence, Domicile and Overseas Aspects of CGT

Taxing a non-resident on all UK assets
Students link UK assets to UK tax by instinct.
Fix: Non-residents are generally outside CGT. Only UK land and property, and related indirect interests, are chargeable.
Applying temporary non-residence to assets bought while abroad
Students remember the five-year test but not the asset condition.
Fix: The rule is aimed at assets acquired before leaving. Check the acquisition date before taxing the gain.
Using the wrong column of the residence table
The table has separate columns for previously resident and not previously resident people.
Fix: Decide whether the person was previously resident first. Then read across the right day band.
Taxing a UK resident only on UK-situated assets
Students confuse CGT with a source-based tax.
Fix: A UK resident is liable on worldwide gains. The remittance basis was abolished from 6 April 2025, so do not tax only amounts brought to the UK. Foreign gains are exempt only for a qualifying new resident claiming the foreign income and gains regime in their first four tax years of UK residence.
Forgetting the annual exempt amount or using the wrong rate
Students focus on scope and rush the computation.
Fix: Use the tax tables: £3,000 annual exempt amount, 18% and 24% rates, and 14% only where business asset disposal relief or investors' relief applies.
Ignoring foreign tax on the same gain
Overseas issues are treated as a separate topic.
Fix: Add a line on double tax relief when the question mentions tax paid abroad. The credit is capped at the UK tax on that gain.

Worked examples

Example 1

Priya was UK resident for each of the seven tax years before she left the UK. She is now not resident. She spent 30 days in the UK in the current tax year and has fewer than four UK ties. She will return to the UK after a total absence of four years, measured from the date she left. While abroad she sold quoted shares that she had owned for ten years before leaving, making a gain of £60,000. She also sold a UK commercial property, making a gain of £40,000. Advise on the UK CGT position of each disposal, ignoring reliefs and the annual exempt amount.

Show the solution

Residence for the year: Priya was previously resident and spent 30 days in the UK. The table says 16 to 45 days makes a previously resident person resident only with 4 or more UK ties. She has fewer than four, so she is not resident for the year.
The shares: they are not UK land. As a non-resident, she is generally outside UK CGT on them at the time of sale.
Temporary non-residence: she was UK resident for at least four of the seven tax years before leaving, and her total absence is four years, which is five years or less.
The shares were acquired before she left, not during the absence, so they are within the rule. The £60,000 gain is taxed in the tax year she returns to the UK.
The UK commercial property: UK land is within the charge for non-residents. The £40,000 gain is chargeable in the year of disposal.

Answer: The £40,000 UK property gain is taxable in the year of disposal. The £60,000 share gain is not taxable when sold, but is taxed in the tax year of her return, because she meets the residence history condition, her absence is four years, and she owned the shares before she left.

Example 2

Tom is UK resident and sells a villa in Spain for a gain of £50,000 in 2025/26. His other income is £70,000, so after the £12,570 personal allowance his taxable income is £57,430. This is above the £37,700 basic rate band. He has no other gains or losses. Spanish tax of £6,000 was paid on the gain. Calculate the UK CGT before any double tax relief, then state the effect of the foreign tax.

Show the solution

Tom is UK resident, so the foreign villa gain is within UK CGT.
Gain: £50,000.
Deduct annual exempt amount of £3,000: taxable gain £47,000.
Tom's taxable income of £57,430 already exceeds the £37,700 basic rate band, so none of the basic rate band is left. The whole taxable gain is taxed at the higher rate of 24%. UK CGT = £47,000 × 24% = £11,280.
Double tax relief: foreign tax of £6,000 is less than the UK tax of £11,280, so the credit is £6,000.
UK tax payable after relief = £11,280 − £6,000 = £5,280.

Answer: UK CGT before relief is £11,280. After credit for the £6,000 Spanish tax, £5,280 is payable.

Exam tips

Start every overseas CGT answer with residence. Markers give credit for stating status and reasoning before any figures.
Write the asset test in one line: UK land or not. That short line often earns a mark in non-resident scenarios.
If the scenario mentions a return to the UK, look for the five-year temporary non-residence test and check the acquisition dates.
Use the CGT rates, annual exempt amount and residence table from the tax tables. Do not quote them from memory.
Add a short advice point. For example, delaying a sale until after five years of non-residence can change the result, but note that UK property is still caught.

Practice questions from Capital gains tax: the scope of the taxation of capital gains

Residence, Domicile and Overseas Aspects of CGT: frequently asked questions

Do non-residents pay UK capital gains tax?

Generally not. The main exception is UK land and property, where gains are chargeable even if you are non-resident. Temporary non-residence can also bring other gains into charge when you return.

How does residence affect CGT liability in the UK?

If you are UK resident in the year of disposal, you are chargeable on gains from assets anywhere in the world. If you are not resident, you are mostly outside the charge. You decide residence using the statutory residence test.

What is the temporary non-residence rule for CGT?

It stops people avoiding CGT by leaving the UK for a short time. If you were UK resident, are away for five years or less and return, certain gains on assets you owned before leaving are taxed in the year you come back.

Where do I find the residence test in the ATX exam?

The statutory residence test table is in the tax tables ACCA provides. It shows day bands and the number of UK ties needed, for people previously resident and not previously resident.