UK NRI selling India property: UK CGT, HMRC reporting and India DTAA double-tax relief
UK tax residents selling Indian property face India LTCG at 12.5% (plus buyer TDS at 12.5%) and UK CGT on the same gain (at 18% or 24% depending on income level). The UK-India DTAA DTAA allows the India LTCG tax paid to be credited against UK CGT. The UK annual CGT exemption (£3,000 from 2024-25) provides a small buffer. Report on HMRC self-assessment SA108 (Capital Gains Summary).
India LTCG tax at 12.5% is creditable against UK CGT (18% or 24%) on self-assessment
UK tax residents selling India property: India charges 12.5% LTCG plus 12.5% buyer TDS on the full sale consideration. UK CGT applies to the same gain at 18% (basic rate) or 24% (higher rate) for residential property from April 2024. The UK-India DTAA credits the India LTCG tax against UK CGT due. Since India rate (12.5%) is lower than UK CGT rate for higher-rate taxpayers (24%), additional UK CGT is typically payable. Report on HMRC SA108 and the Foreign Income supplement SA106.
Key points
- UK CGT on India property: 18% or 24% — UK CGT on residential property is 18% (basic-rate taxpayer) or 24% (higher-rate taxpayer) from April 6, 2024 — higher than India's 12.5% LTCG rate.
- India LTCG credits against UK CGT — India LTCG tax paid is creditable against UK CGT via the DTAA. For higher-rate UK taxpayers, additional UK CGT of ~11.5% (24% minus 12.5%) is typically due.
- UK annual CGT exemption: £3,000 from 2024-25 — From tax year 2024-25, the UK CGT annual exempt amount is £3,000 — a small buffer applied before UK CGT is calculated on the India gain.
Calculating the UK CGT on India property
Step 1: Convert property purchase price and sale proceeds to GBP using HMRC-acceptable exchange rates (typically HMRC's monthly spot rates).
Step 2: Calculate GBP gain = GBP sale proceeds minus GBP purchase price minus GBP allowable costs (legal fees, improvements, selling costs).
Step 3: Apply UK annual CGT exemption (£3,000 for 2024-25).
Step 4: Apply UK CGT rate: 18% if total taxable income + gains are below the UK basic rate limit (£50,270 for 2024-25) for the portion in the basic band; 24% for the higher-rate portion.
Step 5: Credit the India LTCG tax paid (12.5%) against UK CGT. Calculate India tax in GBP at the exchange rate on the date of sale.
Step 6: Declare on HMRC self-assessment SA108 (Capital Gains Summary) and SA106 (Foreign Income — for the FTC claim). Due January 31 after the end of the UK tax year.
UK CGT reporting timeline
60-day rule: UK residents selling UK residential property must report CGT to HMRC and pay within 60 days. This rule applies to UK property — India property sale has no 60-day HMRC rule.
Self-assessment: Report India property sale on the annual self-assessment return (SA108) by January 31. Pay any CGT due by January 31.
Keeping records: Retain India Form 26AS (TDS certificate), original sale/purchase documentation, and exchange rate evidence. HMRC may request these during an enquiry.
Frequently asked questions
Can I use UK CGT principal private residence relief on my India home?
UK PPR relief requires the property to have been your main residence for the qualifying period. An Indian property can qualify for PPR if it was your actual main home — document your periods of residence in India carefully. PPR does not automatically apply just because you lived in the India property.
Does the UK-India DTAA prevent India from charging LTCG?
No. Under DTAA Article 13 (Capital Gains), both countries retain the right to tax gains on immovable property located in their territory. India taxes India property gains; UK taxes the same gain for UK residents. The DTAA provides relief via FTC, not exemption.
Is there a UK CGT annual return I need to file for India property?
No separate UK CGT annual return is needed for foreign property. Report on your regular HMRC self-assessment return (SA100 + SA108 + SA106). If you do not normally file self-assessment, register with HMRC and file.