Non-residents are now subject to Capital Gains Tax (CGT) on UK Residential Property.
For non-UK tax residents, UK residential property became subject to UK capital gains tax (CGT) from 6 April 2015 (1 April 2015 for companies). Non-residents are still outside the scope of UK CGT on all other types of asset, even if they are UK assets, unless they are caught by the anti-avoidance legislation as temporary non-residents if they are non-resident for less than 5 years.
The gain that is chargeable (or loss allowable) is the gain or loss arising since April 2015. There are several ways of calculating this figure, such as using the proportion of the whole gain arising since April 2015, or using the value of the property at 6 April 2015, if known etc.
Principal Private Residence (PPR) relief, which exempts your only or main home from CGT on its gains, has been extended to non-UK tax residents. In order to qualify they must have spent at least 90 days in the property for each tax year when not UK tax resident. The 90 days (or proportion where the property is owned for less than the tax year) can be split between husband and wife and the property can be their PPR in the UK but need not be their main residence in the world. Under these rules, care must be taken to avoid becoming UK tax resident for those years under the Statutory Residence Test.
Non-UK resident taxpayers disposing of a UK residential property need to report the disposal on a NRCGT return and pay any CGT due to HMRC within 30 days of the day after the date the property sale is completed. If the taxpayer is within the UK self-assessment system, they can delay the payment until the normal due date (31 January following the end of the tax year of disposal), but a NRCGT return is still required within 30 days.
UK trusts are subject to CGT on disposals of property, and the CGT charge for non-residents on disposals after 6 April 2015 has been extended to non-resident trusts. The CGT rate for trusts is 28% and trustees are only entitled to an annual exemption at half the rate for individuals (for 2015/16: £11,100 for individuals and £5,550 for trusts). PPR relief will be available to trusts where a beneficiary meets the relevant criteria, including for UK tax-residence or the 90-day rule set out above.
Tax Innovations can help you to report any disposals on which the new CGT charges may arise, and can advise on the availability of PPR or other CGT reliefs to reduce any CGT charge that may arise.
If you own UK residential property, if you need help with completing the self-assessment procedure or if you would like to know more about the reliefs that are available, please contact Tax Innovations on 01962 856 990 or firstname.lastname@example.org.