Originally posted on: 28 July 2025
Updated on: 16 February 2026
Introduction
Last week, I had a call with a client who inherited half a house ten years ago, and shortly thereafter moved to the UK. He’s just sold his house and now faces a fairly chunky UK personal tax bill, all thanks to capital gains. New Zealand (and Australia) don’t have inheritance tax, but in this scenario, it felt as if the UK managed to sneak their own version in through the back door.
To illustrate just how this can play out, let’s turn to a scenario. Two Australian sisters, Emma and Sophie, each have a million-dollar inheritance burning a hole in their pockets. Both decide to buy a nice apartment in Sydney. Then, for Sophie, the classic expat itch kicks in – she’s tempted by life in London, books her flight, and off she goes. Emma, meanwhile, stays put in her new apartment, enjoys a great job, and eventually, after ten years, she too succumbs to the UK’s promise of new adventures (and only slightly less sun).
But here’s the kicker: while their life plans now look nearly identical on paper, the moment they choose to move across the world could spell a difference of tens of thousands of pounds in tax.
If you’ve ever wondered whether “when” matters more than “where” when it comes to moving countries – and moving money – this story is for you. As we follow Emma and Sophie through their parallel journeys, you’ll see just how easily a little timing can turn an inheritance win into an unexpected HMRC bill. By the end, you’ll know how to make sure your own big move doesn’t end in a nasty tax surprise.
So, let’s unpack what really happens when Aussie property, UK residency, and capital gains tax all collide – because sometimes, the date on your plane ticket matters just as much as the destination.
Meet the Sisters
Let’s bring our story to life with Emma and Sophie – two sisters, one inheritance, and two very different approaches.
Emma (the “delayed mover”)
Emma takes her time. After receiving her million-dollar inheritance, she buys a comfortable apartment in Sydney and settles in. For the next ten years, Emma enjoys all the best parts of city life – great job, friends, and family just down the road. Only after a decade does she start eyeing up new adventures, finally booking her ticket and moving to the UK.
Sophie (the “immediate mover”)
Sophie, on the other hand, wastes no time. She also buys an apartment in Sydney for $1 million, but barely has time to unpack before her wanderlust takes over. Almost immediately, she moves to London, leaving her Sydney property as a rental.
Fast forward ten years, and both sisters decide it’s time to sell their Sydney homes. By now, each apartment has grown in value to $1.6 million. For simplicity, let’s assume a nice round exchange rate – £1 to $2 AUD.
On paper, their journeys look almost identical: same inheritance, same property value, same sale price after ten years. But thanks to the UK’s tax rules, the timing of their moves leads to very different results when HMRC comes knocking.
Crunching the Numbers
Let’s put some numbers to Emma and Sophie’s stories to see just how much difference timing can make. For illustration, we’ll use a simple exchange rate of £1 = $2 AUD, and the current UK capital gains tax (CGT) rates: 18% for basic-rate taxpayers, 24% for higher-rate. We’ll ignore transaction costs and the (now fairly modest) UK CGT annual exemption, just to keep things straightforward.
Emma – “Sells Shortly After Arriving in the UK”
Emma spends ten years living in her Sydney apartment, and then moves to the UK, renting out the apartment. After six months in the UK, she decides to sell. But here’s the key: her entire period of property ownership – and the gain – happened while she was living in the property herself. Even though the apartment is in Sydney, she still gets the benefit of the UK’s Principal Private Residence Relief (PPR), which means no UK capital gains tax accrues while she is living in the property. If the property is rented out after she moves, the next nine months of ownership are also CGT free.
UK CGT owed: £0
Why? Emma sold the apartment just six months after arriving in the UK. Thanks to the PPR rules and the “final nine months” exemption, the entire gain is free from UK CGT – even though she was a UK resident at the time of sale, the UK rules work to her advantage.
(Australia may have its own CGT to consider – in Australia, your main residence is exempt from CGT if you’re an Australian resident – but that’s another story. What matters here is that it’s not taxable in the UK, even though she sold it while UK tax resident.)
Sophie – “Move First, Sell Later”
Sophie, in contrast, bought her Sydney apartment, then moved to the UK almost straight away, leaving her property as a rental. She’s been a UK tax resident the entire time she’s owned it, and after ten years, she sells up.
Her numbers look like this:
- Purchase price: $1,000,000 (or £500,000)
- Sale price: $1,600,000 (or £800,000)
- Total gain: £300,000
As a UK tax resident, the entire period of ownership is covered – not just from the date Sophie arrived in the UK.
- UK CGT owed: Between £54,000 and £72,000
(That’s £300,000 × 18% if she’s a basic-rate taxpayer, or 24% if she’s in the higher-rate band)
And there’s no Principal Private Residence Relief (PPR) available – she never lived in the property as her main home while a UK resident.
A simple difference in timing – same inheritance, same investment, wildly different tax bills.
Key Principles This Story Highlights
There’s a lot packed into Emma and Sophie’s story, but a few key principles stand out for anyone thinking about moving to the UK (or already here):
1. UK Tax Residency Switches the CGT Light On
The day you become a UK tax resident, HMRC’s reach extends to your worldwide assets – including any property gains. It doesn’t matter when you bought the asset; it’s all about when you’re resident and when the gain arises.
2. Principal Private Residence Relief (PPR) Still Matters
Actually living in your property – even if only for a year – can make a world of difference. Thanks to the PPR rules, the final nine months of ownership can be tax-free in the UK, even if you’ve already left and started renting the property out.
3. Split-Year Treatment
Get your timing right and you can keep pre-UK gains out of HMRC’s sights. If you sell a property before (or soon after) becoming UK resident, only the increase in value from your UK “start date” can be taxed.
4. Australia vs UK Rules Don’t Line Up
Australia and the UK both have their own capital gains tax systems, with different rules on what’s exempt, how gains are calculated, and even when tax years start and end. Thankfully, the double tax agreement between the two countries means you should get credit in the UK for any Australian CGT already paid on the same gain. But the details can be tricky – planning ahead ensures you don’t pay more than you need to and that you claim any available reliefs correctly.
5. Currency Risk Is Real
HMRC works everything out in pounds, not dollars. If the Aussie dollar drops between the time you buy and sell, your gain can look much bigger in GBP – meaning a larger UK tax bill than you might expect.
“…the service has been fabulous.”
Ah Mike, we think you’re pretty fabulous too!
Planning Tips from No Worries Accounting
A little forward thinking can make a huge difference when it comes to expat property and capital gains. Here are our top tips for making the most of your move:
- Thinking of moving to the UK?
If you can, sell your property or crystallise any gains before you become UK tax resident. It’s the surest way to keep those gains out of HMRC’s reach. ESPECIALLY if you are a Kiwi where CGT does not exist. - Keeping the property?
Actually living in it, even for a short time before you leave, can pay off. The UK’s Principal Private Residence Relief gives you a nine-month tax-free window after you move out – often enough to sell without triggering UK capital gains tax. - Renting it out?
Once your property is let, it’s treated as an investment. Be prepared: the full gain over the entire ownership period be within HMRC’s sights, with no main residence relief available if you never lived in it. - Document everything:
Keep records of when you bought the property, dates you lived there, when you started renting it out, and when you arrived in the UK. These details will be essential if HMRC ever asks for proof. - Stamp Duty Land Tax
One more painful surprise for expats: UK stamp duty land tax (SDLT) doesn’t just look at properties you own in the UK – it counts any residential property you hold anywhere in the world. So if you still own a home (or even a share in one) back in Australia or New Zealand, you’ll be hit with the “additional property” surcharge when buying your first UK place. That’s an extra 5% on top of the standard SDLT rates, applied to the entire purchase price. Even if you’ve never owned a UK property before.
The Bottom Line
- Emma (“delayed move”): £0 UK CGT (sold after 10 years of ownership having lived it for nearly the whole time)
- Sophie (“immediate move”): £54,000–£72,000 UK CGT (sold after10 years ownership having never lived in it)
Moral of the story:
Sometimes, the day you become a UK resident matters more than the day you cash in your property. With the right timing and planning, you can avoid a hefty tax bill – and keep more of your hard-earned gains for your next adventure.