From 6 April 2015 non-UK residents wishing to sell or dispose of a UK residential property will be required by law to contact HM Revenue and Customs (HMRC) to let them know, as Capital Gains Tax (CGT) may be due on any gains made.
This new capital gains tax for non-UK residents comes after an open consultation was held by the Government between 28 March and 21 June 2014 in a bid to discuss the best way to implement a CGT charge on non-UK residents.
According to the Government, the new CGT will affect non-UK residents (individuals or trustees), personal representatives of non-resident deceased persons, and certain non-resident companies. These companies are mainly micro businesses controlled by five or less persons — speak with your accountant if you’re unsure if this includes your company.
Certain UK residents who dispose of UK property when abroad will also be affected, as will any of the above persons, trustees, or companies who are partners in a partnership.
If you fall into the affected group you’ll be required to contact HMRC within thirty days of selling or disposing of a UK residential property to establish whether you have a gain. You can tell HMRC of your sale or disposal online, and they advise that further information on this matter is due to follow.
Calculating Your Gain
When calculating your gain keep in mind that only the overall amount of gain after 5 April 2015 is chargeable, therefore the Government recommend that you work out your gain in one of two ways:
- Rebasing: Establish the exact value of your property on 5 April 2015, after which you calculate your gain between then and the day your sale is completed.
- Apportioning: Apportion the whole gain on the length of time you owned the property after 5 April 2015, compared to the total time you’ve owned it.
If you know you’ll be selling within the next few months it’s a good idea to record the overall value of the property at the start of April, as this will make the job of valuing it once it sells that much easier. We recommend bringing in an independent valuer (or two), as this will ensure HMRC are less likely to query it.
The Government advise that the amount you’ll pay will depend on the value of your gain between 6 April 2015 and the day your sale is completed, whether or not you have unused losses to take advantage of, and the amount of private residence relief you may hold. Other factors that could affect the amount you pay include whether or not you have an annual exemption limit, the amount of indexation allowance (if you’re a company), and the current CGT rate.
Experienced Capital Gains Tax (CGT) Accountants
To speak with a professional to discuss this new Capital Gains Tax for non-UK residents, contact us today on 020 8780 2349 or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.