'I sold my flat in India last year - do I actually have to tell HMRC?'
Written by Suyesh Sharma, FCCA, Founder and Managing Director, Metta Accountants.
Published 28 May 2026
The Short Answer: Yes, You Almost Certainly Do
If you were UK tax resident when you sold your Indian property, the gain is taxable in the UK. It does not matter that you also paid tax in India. It does not matter that the property was bought before you moved to the UK. It does not matter that the money never entered a UK bank account.
UK tax residents are taxed on gains from assets anywhere in the world - not just UK property.
Indian CGT paid can be credited against your UK liability - but only if actively claimed on your self-assessment return.
Buying the property before moving to the UK does not exempt the gain. What matters is where you were resident at the point of sale.
Under the current FIG regime, it is your residence status - not where the money sits - that determines your UK tax position.
But I Paid Tax in India - Doesn't That Count?
It does - and this is where the UK-India Double Taxation Agreement (DTA) matters. The DTA exists to prevent you being taxed twice on the same gain. The Indian tax you paid can normally be credited against your UK CGT liability.
But the key word is can. The credit is not automatic. You have to actively claim it in the foreign tax credit relief section of your self-assessment return, with supporting documentation. If you do not claim it, HMRC will tax the gain in full with no offset for what you paid in India.
Long-term capital gains tax (and surcharge) paid in India on the property sale can be set against your UK CGT on the same disposal - but must be claimed explicitly on the SA return.
We regularly see clients who filed their own returns and simply missed the foreign tax credit box. The result: full UK CGT charged with zero offset for Indian tax already paid.
A Story We See Often
The flat in Bengaluru that cost her twice
Priya had owned a flat in Bengaluru since 2009. She sold it in 2024 for a substantial gain, three years after moving to the UK. Her Indian CA handled the Indian side perfectly - the right TDS deductions, correct filing, everything above board.
Priya assumed her UK obligations were covered. She did not file a self-assessment return for that year. Eighteen months later, HMRC opened an enquiry. The gain had been identified through bank transfer records and the automatic exchange of information between India and the UK.
By the time we were brought in, Priya faced the original unpaid UK CGT, plus interest from the due date, plus a late-filing penalty, plus a potential deliberate-omission penalty - even though she genuinely had not known. The Indian tax she had paid was eventually credited, but the penalties and interest were not recoverable.
With careful management of the disclosure, we significantly reduced her penalty exposure. But it was a stressful and entirely avoidable experience.
How the UK Calculates the Gain
This is where errors are most common - even among accountants who do not specialise in cross-border disposals. The UK calculates the gain in sterling, using the sterling equivalent of sale proceeds and purchase price at the dates they were paid.
The following costs can be deducted to reduce your UK gain:
- Enhancement expenditure - capital improvements (extensions, structural work, major refits - not routine maintenance)
- Acquisition and disposal costs - solicitor fees, registration charges, brokerage at both ends, converted to sterling at the relevant dates
- Annual CGT exempt amount - £3,000 for 2025-26
- Foreign tax credit relief - Indian CGT paid, properly evidenced and claimed on the return
What If You Arrived in the UK Recently? The FIG Regime
If you first became UK tax resident in 2022-23 or later, you may be eligible for the Foreign Income and Gains (FIG) regime - a four-year window during which overseas gains are not subject to UK tax.
If the sale falls within your FIG window, no UK CGT is due - regardless of the gain size. But you must make the election correctly on your self-assessment return or the exemption is lost.
If you first became UK resident in 2023-24, your FIG relief runs out on 5 April 2027. Any overseas gains after that date - including Indian property sales - are fully taxable in the UK.
Once the FIG window closes, all of the following become fully taxable in the UK: Indian property sale proceeds, EPF and GPF withdrawals (even built up before you arrived), life insurance policies maturing in India, dividends and interest from Indian investments, and any other foreign gains crystallising after your window shuts. If you are planning to sell Indian property or liquidate other assets, timing the disposal before the window closes can make a very significant difference.
The HMRC Enquiry Risk Is Real - and Growing
India and the UK exchange financial information automatically under the Common Reporting Standard (CRS). This includes bank accounts, investment accounts, and increasingly property transaction data. When a large overseas property sale is transferred to a UK account and nothing appears on a self-assessment return, it is exactly the pattern HMRC's Connect system is designed to flag.
Voluntary disclosure before HMRC contacts you almost always results in significantly lower penalties than disclosure after. If you have an undisclosed property sale in your history, the sensible course is to address it proactively - on your terms.
What to Do - Depending on Your Situation
Work through this based on where you are right now.
Get specialist advice before filing. The gain needs to be calculated correctly in sterling, the foreign tax credit claimed properly, and the FIG election made if applicable. A correctly filed return is your best protection.
A review of your submitted return can identify whether the gain was captured, whether the foreign tax credit was claimed, and whether any amendment is needed. Voluntary amendment before HMRC raises an enquiry carries no penalty.
A voluntary disclosure via HMRC's Worldwide Disclosure Facility is almost always the right route. This gives you control over the narrative, the best chance of minimising penalties, and a clean resolution. Do not wait for HMRC to contact you first.
Do not respond without specialist advice. Bring the letter to us before anything is put in writing. We will review your position, advise on what needs to be disclosed, and manage the response to achieve the best outcome.
The timing of your disposal can make a very significant difference - particularly if you are still within your FIG window, or approaching the end of it. Structuring the sale correctly before the window closes can save a substantial amount in UK tax.
Not sure where you stand?
Our free Tax Health Check is designed to identify exactly these gaps - an undisclosed overseas gain, a missed relief, or planning opportunities before your FIG window closes.
Metta Accountants - UK-India Tax Specialists · Harrow, London
Suyesh Sharma
Founder & FCCA
Helping high earners and business owners keep more of what they earn through strategic planning.
