Navigating the landscape of UK property tax changes

Glenn Cassidy, Senior Tax Consultant at Equiom Solutions outlines some important changes to the taxation of UK property.

Q1: What is the current tax situation for local owners of UK residential and commercial property and how has that changed over the years?

Prior to April 2013, there was no UK Capital Gains Tax (CGT) payable by non-UK residents on disposal of UK residential property, but the charge has slowly crept in over the last five years with more and more owners of UK property now affected.

In 2013, non-UK resident companies realising gains on disposals of ‘expensive’ (worth more than £500,000) UK residential properties became liable for a CGT charge.

Then in April 2015, the UK Government announced that CGT would apply to all non-UK residents realising gains on disposals of all UK residential property. This extended the scope to include individuals, trusts and companies with UK residential property both below and above the value of £500,000.

In November 2017, a consultation paper on the taxation of gains for non-UK residents on UK property was published and in it the UK government announced its intention that, effective April 2019, any gains realised on the disposal of all UK property will be subject to UK CGT, meaning that non-UK residents will be liable for CGT on both residential and commercial property, owned by individuals, trusts and companies. The charge would also apply to disposals of substantial interests (shares) in entities holding UK property.

Q2: Was there anything announced in the recent UK budget with respect to these changes and what’s next?

On UK Budget Day, 29 October 2018, the UK Government announced that it intended to implement CGT on gains for non-UK residents on UK property exactly as was suggested in the consultation document. At this time, they presented the final version of the legislation which had a few minor amendments from the original draft. The next step will be for the final legislation to seek Royal Assent in March 2019 before becoming law in April 2019.

Q3: Is there anything people should do now to prepare for the April 2019 and 2020 changes?

People should most definitely review their UK commercial property assets ahead of April 2019. Global real estate services provider, Savills has advised its clients that if there are planned works, such as the renewal of a lease or repair works, which will increase the value of the property, then it would be sensible to undertake them before April 2019. Equally, if you are planning a sale of your commercial property and contracts are able to be exchanged before April 2019, then this would be sensible.

If you are interested in learning more about these tax changes or your obligations as a non-UK resident, please contact me on glenncassidy@equiomgroup.com or call +44 (0)1624 652047.