A Reminder For All Non-Residents Disposing Of UK Property – CGT and Reporting Requirements

As of now, changes have come into play which means all non-resident individuals and trustees are subject to capital gains tax (CGT) on direct and certain indirect disposals of UK immovable property, whether that is residential or commercial property. In addition, all non-resident companies, from April 2019, became subject to corporation tax on chargeable gains on direct and certain indirect disposals of UK property – both residential and commercial.

Re-basing

For UK commercial property already held at 5 April 2019 and disposed of (either directly or indirectly) after that date by a non-resident, the acquisition cost is re-based to the property’s value as at 5 April 2019.

For UK residential property held directly by non-residents from at least 6 April 2015 there is an option to re-base to 5 April 2015 under the rules which have applied since 6 April 2019.

Reporting

An often-overlooked element of the changes is that non-UK resident individuals and trustees have been required to report disposals of UK property or land within 30 days of completion of the disposal.

In addition, a payment on account of CGT tax due from non-resident individuals or trustees must be paid within the 30-day reporting period. Failure to report and pay within the timeframe will result in penalties and interest.

Non-resident companies are subject to corporation tax procedures and deadlines. Any companies that have become chargeable to tax for the first time following the tax changes have three months from the date of disposal of the property to register with HMRC for corporation tax.

CGT exemptions

Existing CGT exemptions are available for non-residents. This includes disposals between spouses or civil partners and also where a residential property is an individual’s principal private residence (subject to certain criteria).

CGT rates on disposals of UK property by non-residents from 6 April 2019

For disposals of all UK real property after 6 April 2019, non-resident individuals and trustees are chargeable to CGT as follows:

2019–20
CGT for non-resident individuals below income tax basic rate limit (£37,500) 18%
CGT for non-resident individuals above income tax basic rate limit 28%
CGT for non-resident trustees 28%
Companies 19% (corp. tax)

(N.B. The UK is currently reviewing CGT rates with the possibility that they may be increased, potentially in line with income tax rates)

If you would like to discuss any aspect of the above or your specific circumstances, please don't hesitate to contact one of our experts:

Alasdair Johnston – London   alasdair.johnston@abacustrustgroup.com

Kevin Loundes – Isle of Man  kevin.loundes@abacustrustgroup.com

Andrew Faulkes – Monaco     andrew.faulkes@abacustrustgroup.com