CAPITAL GAINS TAX FOR ALL NON-RESIDENTS OWNING UK PROPERTY
Published on 21 January 2014. updated November 2015U
In our last newsletter we covered the then new taxes for owners of the property valued more than £2m where this was held by a non-natural person (usually non-resident company).
This included the 15% rate SDLT (formerly Stamp Duty) the new Annual Tax on Enveloped Dwellings (ATED) (with quite few exemptions) and Capital Gains Tax on the disposal of the property that had attracted ATED.
Now, in his autumn statement Chancellor announced that ALL non-residents would be liable to Capital Gains Tax on the disposal of a UK residential property. This will be charged on the gain arising after 5th April 2015 and so it would be wise to obtain a valuation of such a property on that date. The gain that accrued before 5th April 2015 will continue to be outside the scope of UK taxation where the property is held by a non-resident and is not subject to ATED. Our information is that at present this will only apply to residential property but as ever the devil is in the detail and we will have to wait for this neew measure to become law before we can be certain.
Most of the gain will be taxed at 28% if the tax rates remain as they are now.
It seems that the Chancellor thinks that this step will cool the housing market by making it less attractive to foreign investors. And we thought he wanted foreign investment!
We should emphasise that the new CGT for non-residents only applies to gains arising on the disposal of Residential property. Only the gain arising after 5th April 2015 is taxable.
All disposals of UK residential property by non-residents must be notified to HMRC on a return NRCGT. This form includes the calculation of the gain or loss arising on disposal and must be submitted to HMRC within 30 days of the completion of the sale. The non-resident vendor may delay payment until the submission of his or her Self Assessment tax return otherwise payment is also due within 30 days of completion of the sale. The advice must be that with such short timescales any non-resident vendor must make sure the 5th April 2015 valuation is readily to hand along with a copy of the completion statement he was given at the time of purchase. See The New Reporting and Paying Rules.