Have you tried to change the size of the collision volume while the player is sitting down? And reset it back to normal when he is back on his feet.
Another possible option will be to use two collsion capsules. The one at the root will be your main Volume. The second one will be smaller and cover your player’s Hip to Head. When you are sitting down, disable collision on the big one. Havent tried this one myself. So it may or may not work
To make him actually sit without predefined animation, You will need Inverse Kinematics. I am not sure if UnrealEngine currently has full support for this, but I saw something like this in the content examples (with Oven character).