At present, individuals who are not tax resident in the UK are not generally subject to UK Capital Gains Tax ("CGT").
The UK Government announced in its Budget 2014 proposals that from 6 April 2015 all non-UK residents will be subject to UK CGT on gains arising on the disposal of UK residential property, with the exception only of certain classes of communal property such as care homes, children's homes or purpose-built student accommodations. However, the charge will not apply to institutional investors or companies and other entities such as collective investment funds where there is genuine wide ownership. The charge is targeted at ownership of UK residential property by individuals and privately owned companies (directly-held UK residential property).
Tax rates will broadly mirror those for UK residents, with individuals and trusts taxed at up to 28%, and companies (which will still get indexation allowance) at 20%. Tax will be levied only on the part of the gain arising after 6 April 2015: the taxpayer will be able to choose either to apportion the gain on a time basis or to treat the property as having been acquired on 6 April 2015 at its market value on that date. If you are affected by the proposed changes, it is worth considering the value of the property at April 2015, as this could be more difficult to do when the property comes to be sold.
Our advice to clients potentially affected is to consider obtaining, if not a formal valuation, then at least some contemporary evidence of the market value as at 6 April 2015 rather than leaving it until the property is disposed of, possibly many years later.
The above briefing note is based on draft legislation only and should be regarded as provisional. In all cases specific tax advice should be sought.
Imelda Prendergast is Director in OSK Contracting and OSK Small Business Support. Call OSK on 01 439 4200 for more details of our contractor accountimg services.
A video message from Tadgh O'Sullivan, Director.
To request a call back from the OSK team, please complete the form below.