On 22 November 2017 the government published a consultation document on the tax treatment of gains accruing to non-residents on disposals of UK immovable property. The proposals are broadly to align the capital gains treatment of residential and commercial property by means of the following:
introducing a new charge to tax on disposals of commercial property by non-residents;
non-residents exempt for reasons other than non-residence (for example overseas pension schemes) to retain their exemption;
extending the current charge on disposals of residential property to non-resident widely-held companies (in broad terms, to companies owned/controlled by more than 5 persons and companies whose directors do not also own/control the company);
introducing a charge to tax on indirect disposals of UK immovable property (e.g. on disposals of shares in an offshore entity which owns UK immovable property) where 75% or more of the gross value of the entity disposed of is represented by UK immovable property and the seller holds at least 25% of the value in the entity or has done so at any time within the previous 5 years;
charging gains accruing to non-resident bodies corporate to corporation tax rather than capital gains tax;
phasing out the separate regime for ATED-related CGT;
with effect from 22 November 2017 introducing anti-avoidance measures to counteract arrangements which seek to avoid the new charges; and
accepting that taxing rights might belong to the country in which the seller is resident depending on the precise wording of any applicable double tax treaty.
Save for the anti-avoidance measures, the above changes will come into effect from April 2019. Where new charges apply, property values will be re-based at April 2019.
For more information please contact one of the following members of our private client team:
Penny Wotton at firstname.lastname@example.org
Nick Beecham at email@example.com
Amanda Gordon-Napier-Tompkinson at Amanda.firstname.lastname@example.org
Olga Tabenko at email@example.com
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