UK residential property
You need to submit a non-resident CGT return if you’ve sold a UK residential property after 5 April 2015; if you’re a non-resident individual, trustee, company or fund, or a UK resident meeting split year conditions and the disposal is made in the overseas part of the tax year.
You must tell HMRC within 30 days of conveyance (completion) even if you have no tax to pay or have made a loss or you are registered for self assessment.
You might also have to pay any non-resident Capital Gains Tax due within the same 30 day period, although there are exceptions to the pay now rule if you already have an existing relationship with HMRC – for example, through Self Assessment. If you do, you can either pay when you submit your return, or defer payment until your normal due payment date
There are 3 ways to calculate your gain or loss:
- using the market value at 5 April 2015
- by working out the gain over the whole period (the date the property was acquired to the date it was disposed of) and then working out what the gain since 5 April 2015 is as a proportion – known as time apportionment
- by working out the gain over the whole period
For disposals of UK residential properties by non-residents where you owned the property before 6 April 2015 the standard approach for calculating the gain is to use the market value at 5 April 2015.
- Establish the value of your property as of 5 April 2015 (known as ‘rebasing’).
- Work out the difference between the value on 5 April 2015 and the value when you disposed of the property.
- Deduct any costs of improving the property (enhancement costs) incurred from 5 April 2015 and the legal cost of selling the property (incidental disposal costs).
You can work out a simple straight-line time apportionment of the whole gain made over the period you owned the property.
Gain over the whole period of ownership
This computation method may only be worth considering if you’ve made a loss.
UK commercial property
UK-situated non-residential real property held as an investment by non-UK residents has been brought into the scope of UK CGT with effect from 1 April 2019.
Currently, CGT only applies to disposals and subsequent gains on UK residential property with an exemption for property held by certain widely-held non-resident companies.
A single regime covering both residential and commercial property will remove the current exemption for widely-held non-resident companies.
The new regime will also extend to indirect disposals through sales of interests in property-rich companies, property unit trusts and partnerships. A non-resident investor holding a 25% or greater interest in an entity that derives 75% or more of its gross asset value from UK real estate will be caught under the new legislation.
The new rules only apply to gains in value post 1 April 2019 for companies and 6 April 2019 for others. There is a proposal for rollover relief to be available to allow gains to be deferred into new assets, but this is yet to be confirmed.
For both UK residential and commercial property, the CGT rate is the same for UK residents (i.e. 18/28% for residential property, 20% for commercial property).