Further details on the CGT charge for non-residents

1 December 2014

The government announced further details on Thursday in relation to the capital gains tax charge for non-residents on the disposal of UK residential property.

This proposal has been under consultation for most of this year and the key points that are to be introduced from April 2015 are:

  • Private Residence Relief is unlikely to be available for many non-resident individuals on their UK property, where they have not lived in the property for more than 90 days each year since leaving the UK.
  • Gains prior to April 2015 will be exempt but gains after April 2015 will be taxed under the new rules.
  • Property values will be re-based at April 2015, or the individual can choose to time apportion the gain.
  • The rate of tax will be 18% or 28% (subject to UK source income and gains) and the annual exempt amount (currently £11,000) will be available to non-residents.
  • Under the new rules, disposals will need to be reported to HMRC within 30 days of completion.
  • The rules will apply to non-resident close companies owning UK residential property, which could have significant ramifications for overseas companies.

The above changes could be more widespread than first envisaged and will need to be reviewed by non-residents to identify the impact and what steps can legitimately be taken to minimise the future charges.

Draft legislation is expected in the Autumn Statement on Wednesday, which will provide further details behind the above headline announcement.

For further information please contact Simon Browning, or a tax adviser at your nearest location.  Alternatively, you can complete our online contact form.