As a general rule, non-UK residents were not subject to UK Capital Gains Tax (“CGT”) arising from sales of UK property. However, the Annual Tax on Enveloped Dwellings (“ATED”) regime was introduced in April 2013. In addition to the imposition of an annual charge on certain high value UK residential property held by Non Natural Persons (“NNPs”), this introduced a capital gains tax (“ATED-CGT”) charge on the sale of UK residential property held by NNPs. The ATED-CGT rate is 28%. Changes to the ATED regime were announced in 2014, extending the regime to properties worth over £1 million from 1 April 2015 and £500,000 from 1 April 2016.
Furthermore, with effect from 6 April 2015, a new CGT charge applies to any non-UK resident who disposes of an interest in a UK residential property irrespective of its value (Non-Resident CGT or “NRCGT”). The NRCGT rate for companies is 20% and for individuals the rate is 18% or 28% (depending on the level of other UK source income/chargeable gains in the tax year of disposal). The charge only applies to gains arising after 5 April 2015. The taxpayer has the option to choose whether to calculate his gain using the market value of the property as at 5 April 2015, or to time apportion the historic gains with only the post 5 April 2015 part being taxed.
Further administrative detail on reporting and paying NRCGT is set out in our separate Briefing Note entitled “Reporting and Paying CGT for Non-Residents – UK Residential Property”
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