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Capital Gains on UK Property for Non-Residents

UK Property_TaxAgility Accountants LondonIn his Autumn Statement, delivered to parliament early last month, Chancellor of the Exchequer George Osborne touched upon legislation, due to come into effect from April 2015, requiring non-UK residents to pay UK Capital Gains Tax (CGT) on sales of any UK residential properties – regardless of their sale value.

Though the main features surrounding the likely structure of this Capital Gains Tax have been revealed, the full details regarding this move have yet to be discussed, with a consultation on how the legislation can best be introduced set to be published early this year, once HMRC have been given a chance to look over the suggested new features.

Likely Features

Regardless, what we do know right now appears to be fairly solid information to take on board going forward, including:

  • The new legislation, when in force, will only apply to gains on the sale of UK residential properties, by non-UK residents, that take place after April 2015.
  • Commercial properties will remain unaffected, and will therefore not be subject to capital gains tax when sold on by a non-UK resident.
  • Under the new legislation, the tax will apply regardless of a property’s sale value, unlike under ATED (see below) which only taxed properties sold for upwards of £2 million.

Differences to ATED

The Annual Tax on Enveloped Dwellings (ATED), which came into effect in April 2013, was introduced as part of a package of taxes (namely ATED, stamp duty land tax; SDLT, and capital gains tax; CGT).

This package of taxes only affects residential properties in the UK worth more than £2 million if owned, completely or partly, by a company, a partnership in which one of the partners is a company, or a collective investment vehicle. Unlike ATED, the proposed legislation for Capital Gains Tax on sales of UK properties owned by non-UK residents, is directed solely at non-UK residents, and it will affect your property sale regardless of its sale value.

Current Questions

Despite standing out as one of the more significant announcements in George Osborne’s Autumn Statement, it’s fair to say there are still a large number of details surrounding the legislation that have yet to be confirmed, including:

  • Whether or not the legislation will apply to a UK residential property held by a non-resident company or trust.
  • Whether or not gains accrued up to April 2015 will be grandfathered in, or whether they will also become payable once the legislation comes into effect.
  • The exact rate at which the capital gains tax will be charged, and the rate bands in which these residential properties will sit.

Of course, once these details become clear we will update you on any changes immediately.

Further Information on Capital Gains on UK Property for Non-Residents

To speak with a professional regarding how this new legislation will affect you as a non-UK resident with properties in the UK, contact us today on 020 8780 2349 or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.

 

This blog is a general summary. It should not replace professional advice tailored to your specific circumstance.

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