Since 6 April 2019, any disposals of interests in UK property or land by non-residents are chargeable to UK capital gains tax (CGT).
Residential property disposals have been liable to CGT since April 2015, but the government has now ‘widened the net’ such that disposals of non-residential property are also caught.
Further, some indirect disposals of interests in UK property will now also be subject to CGT in the UK. For example, a non-resident disposing of shares in a company that derives 75% or more of its value from UK land would be subject to CGT if the individual has a 25% or greater shareholding in that company.
Only gains arising post 6 April 2019 will be subject to CGT (although residential property held by non-residents prior to 5 April 2019 will continue to be tax taxed under the old rules) and therefore it will be necessary to rebase for tax purposes (as was the case in 2015 for residential properties). If, however, the value of the property/shares were greater when acquired, it is possible to elect to use historic cost. Although formal valuations are not required, we would recommend that consideration is given to obtaining some form of evidence in support of the valuation as at 6 April 2019.
Disposals need to be reported and CGT paid within 30 days. Currently, if already within UK self-assessment, payment can be delayed in line with normal self-assessment deadlines. However, from April 2020 non-residents will be required to make a payment on account of the CGT within 30 days even if under self-assessment.
Unfortunately, it looks like the UK government is continuing to target non-resident property owners further, with proposals for a 1% SDLT surcharge on UK residential property purchases. Details and a commencement date for this are yet to be confirmed.
If you would like further information or assistance with reporting a disposal or calculation of tax liabilities, please do get in contact with us.