Capital gains tax charge on UK residential property owned by non-residents

From 6 April 2015 the CGT regime is extended to non-UK residents (which includes individuals, trustees, companies and funds) disposing of UK residential property. This was introduced because the Government was concerned at the disparity between how individuals and entities are taxed in the UK on disposals of UK residential property (as outlined above), compared to how other countries tax the disposal of residential property in their jurisdictions.

Only the gain arising since 6 April 2015 is chargeable, which is achieved either by rebasing or time apportioning the total gain. A return disclosing the transaction must be submitted to HMRC within 30 days of conveyance of the property.

This guidance note provides an overview of the new rules with a focus on the application to individuals, including the changes to the principal private residence (PPR) rules, although other chargeable persons are also mentioned.

Abstract:

Historically only UK resident individuals and entities, together with temporary non-UK resident individuals and those operating via a UK permanent establishment, branch or agency, have been subject to UK capital gains tax (CGT) whilst non-UK residents have not. However, this was widened from 6 April 2013 to include disposals of UK dwellings owned by non-resident companies, partnerships and collective investment schemes where the dwelling was subject to the annual tax on enveloped dwellings (ATED) charge. For more on the ATED charge and the ATED-related CGT charge, see Simon's Taxes Division B6.7 and C2.1125.

From 6 April 2015 the CGT regime is extended to non-UK residents disposing of UK residential property. This was introduced because the Government was concerned at the disparity between how individuals and entities are taxed in the UK on disposals of UK residential property (as outlined above), compared to how other countries tax the disposal of residential property in their jurisdictions.

This guidance note is intended to provide an overview of the new rules with a focus on the application to individuals, although other chargeable persons are also mentioned.

Download guidance note