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Gains made by non-UK residents on UK immovable property

24/11/2017
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.

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 penny.wotton@fieldfisher.com

Nick Beecham at nick.beecham@fieldfisher.com

Amanda Gordon-Napier-Tompkinson at Amanda.gordon-napier-tompkinson@fieldfisher.com

Olga Tabenko at olga.tabenko@fieldfisher.com

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