Budget 2015; the new non-resident CGT charge explained
The Chancellor has not announced any new taxation measures which will apply to non-UK residents owning property in the UK but the Government has today issued some long awaited guidance on how the new
The Chancellor has not announced any new taxation measures which will apply to non-UK residents owning property in the UK but the Government has today issued some long awaited guidance on how the new charge to CGT on gains which arise to non-UK residents from 6 April 2015 on the sale of UK residential property in their direct ownership will work.
The Government has confirmed that in calculating the gain arising from 5 April 2015 you will have a choice of either "rebasing the value of the property at 5 April 2015 or carrying out a straight-line time apportionment of the whole gain over your period of ownership." If you wish to rebase the rate of tax will be the same for non-UK residents as for UK residents i.e. 28% for trustees and personal representatives and 18% or 28% for individuals.
The Government has also confirmed that private residents relief (PRR) will be available if the property is your only or main residence for each year in which you satisfy a new occupancy test which will require you, in conjunction with your spouse/civil partner (but not allowing double country) stay overnight in the property at least 90 times during a tax year (apportioned where you own the property (if only part of the year). If you meet the conditions to claim PRR under the old test for occupation before 5 April 2015 you will still be entitled to claim PRR under the old rules.
On disposal of UK residential property after 5 April 2011 you will need to report the disposal to HM Revenue & Customs an on-line resident CGT return and avoid paying the CGT due within 30 days of completion of the sale. If you already file a UK self-assessment return you will still need to report the disposal on the non-resident CGT return within 30 days of sale but you will have the applicable payment deferred if the CGT [will] your normal end of year tax payment date.
A non-resident CGT return will be required to report your disposal even if no CGT is due.
You will be entitled to set any losses on disposal of UK residential property against gains on disposals of UK residential properties in the same year or carry those losses forward to later years and if you later become UK resident you will be allowed to claim those losses as general losses against other chargeable gains.
These changes do not affect ATED related CGT which will continue to apply. However, where ATED related CGT is payable there the [ ] charge will not also be subject to the new non-resident CGT charge.
The Government has confirmed that in calculating the gain arising from 5 April 2015 you will have a choice of either "rebasing the value of the property at 5 April 2015 or carrying out a straight-line time apportionment of the whole gain over your period of ownership." If you wish to rebase the rate of tax will be the same for non-UK residents as for UK residents i.e. 28% for trustees and personal representatives and 18% or 28% for individuals.
The Government has also confirmed that private residents relief (PRR) will be available if the property is your only or main residence for each year in which you satisfy a new occupancy test which will require you, in conjunction with your spouse/civil partner (but not allowing double country) stay overnight in the property at least 90 times during a tax year (apportioned where you own the property (if only part of the year). If you meet the conditions to claim PRR under the old test for occupation before 5 April 2015 you will still be entitled to claim PRR under the old rules.
On disposal of UK residential property after 5 April 2011 you will need to report the disposal to HM Revenue & Customs an on-line resident CGT return and avoid paying the CGT due within 30 days of completion of the sale. If you already file a UK self-assessment return you will still need to report the disposal on the non-resident CGT return within 30 days of sale but you will have the applicable payment deferred if the CGT [will] your normal end of year tax payment date.
A non-resident CGT return will be required to report your disposal even if no CGT is due.
You will be entitled to set any losses on disposal of UK residential property against gains on disposals of UK residential properties in the same year or carry those losses forward to later years and if you later become UK resident you will be allowed to claim those losses as general losses against other chargeable gains.
These changes do not affect ATED related CGT which will continue to apply. However, where ATED related CGT is payable there the [ ] charge will not also be subject to the new non-resident CGT charge.