We advise non-resident clients on how to manage their UK Capital Gains Tax ("CGT") applies in certain cases when an asset is sold for more than it was originally purchased. The taxable gain (profit) may be triggered following the transfer of an asset, although commonly this would follow a sale. A number of tax reliefs are available to exempt or reduce the tax that may apply. Basic tax planning may... More (Capital Gains Tax ("CGT") applies in certain cases when an asset is sold for more than it was originally purchased. The taxable gain (profit) may be triggered following the transfer of an asset, although commonly this would follow a sale. A number of tax reliefs are available to exempt or reduce the tax that may apply. Basic tax planning may... More) position.
Individuals who are not resident in the UK are generally exempt from CGT on gains made on the disposal of their UK assets. However, since 6 April 2015, gains made by non-residents on the disposal of UK residential property will become chargeable to UK CGT.
Who is taxable?
Any of the following who own and dispose of a UK residential property:
- An individual who is not deemed to be resident in the UK as defined by the Statutory Residence Test.
- Non-resident personal representatives of an estate of a deceased person.
- Non-resident trustees of a settlement.
- Non-resident partners of a partnership or members of an LLP.
- Non-resident companies.
What is taxable?
Most disposals of an interest in UK residential property are now taxable if they are considered to be a dwelling during a relevant period of ownership.
How is the gain calculated?
The default method of calculating the gain arising will be to calculate the uplift in the property’s value from 6 April 2015 to the date of sale.
Alternatively, it is possible to elect to time-apportion the gain on a straight line basis, with the relevant proportion being the gain accrued from 6 April 2015. It is also possible to elect to use the original cost of the property rather than its value at 5 April 2015 in arriving at the taxable gain.
We will calculate and advise you on the most favourable method of calculating your capital gain.
Payment and administration
Non-resident individuals and companies will need to report the disposal to Her Majesty's Revenue and Customs (HM Revenue and Customs or HMRC) is a non-ministerial department of the UK Government responsible for the collection of taxes, the payment of some forms of state support and the administration of other regulatory regimes including the national minimum wage.... More within 30 days of sale of the property and make payment of the tax at the same time. If they are already within Self-Assessment, the gains will be reported as usual within a tax return, and the tax payment should be made at the usual time.
We have seen numerous cases where these returns have been filed late and HMRC have issued late filing penalties, even in cases where there is no capital gains tax liability!
In most cases to date we have been able to provide clients with the comfort and advice they required on the UK capital gains tax position and we often prepare illustrative calculations priot to a property being put on the market so that the vendor is filly informed on potential costs of sale, including UK taxes.
If any of the above circumstances apply to you and you are thinking of selling, or have sold a UK residential property please contact us for expert advice.