Under existing legislation, non-resident individuals are required to complete a Non-Resident Capital Gains Tax Return within 30 days of the sale of any UK residential property.
They are also required to calculate the CGT liability arising and make a payment on account of the full amount of the calculated liability, within that 30 day period.These rules have been in place since April 2015 and where a gain arises, there are three options that can be used for the calculation:
- Rebasing the cost of the property to the market value at 6 April 2015
- Time apportioning the gain for the pre- and post-April 2015 periods of ownership
- Calculating the Capital Gain under normal rules using the original base cost (usually used where a loss arises)
From April 2019, the scope of this legislation has been extended to include the sale of non-residential land and property in the UK by non-resident individuals, trusts and companies. Such disposals have previously been exempt from UK CGT so this expands the tax net.
Where these non-resident CGT returns are completed by individuals already in self-assessment, there is currently the option to make an election to pay the CGT liability through self-assessment instead of within 30 days. This defers the tax payment becoming due until 31 January after the end of the relevant tax year, however, this option will be removed from April 2020.
For Capital Gains on the sale of non-residential property, the same options for undertaking the calculation of the gain will be available but the rebasing and time apportioning will be based around April 2019 instead of April 2015.
All non-UK companies, including close companies, caught by this legislation will be charged corporation tax rather than CGT on their gains.
All non-UK resident persons will also be taxable on indirect disposals of UK land, which will apply where a person makes a disposal of an entity that derives at least 75% of its gross asset value from UK land, although there will be an exemption for investors who hold an interest of less than 25% in the entity.
The gains on indirect disposals will be calculated using the value of the asset (e.g. shares) being disposed of rather than the value of the underlying UK land.
