Individuals that own property in the UK but live overseas have been advised of a tax charge which comes into force next month on sales of both residential and commercial property and land.
The Association of Taxation Technicians (ATT) stated that non-UK residents who sell any UK land or property from 6 April onwards must file a non-resident Capital Gains Tax (CGT) return and pay any tax due within 30 days of the sale.
In addition, non-resident companies will be brought within the charge to corporation tax, rather than CGT, in respect of chargeable gains.
Non-UK residents selling a residential property have been liable to UK tax – and must complete a mandatory tax return within 30 days of sale – since 6 April 2015.
However, from 6 April 2019, these rules will apply to all sales of UK land and property, both residential and commercial, as well as removals of substantial interests in companies which are UK property-rich otherwise known as indirect disposals.
Jon Stride, who co-chairs the Technical Steering Group for the ATT said: “Any non-UK resident who owns an interest in UK land or property needs to be aware of these significant changes.
“In particular, those looking to sell need to be aware that they will have to file a non-resident Capital Gains Tax return with HMRC and pay any tax due, in a very short time frame.
“Non-residents who hold UK commercial land or property should consider getting their property valued as at 6 April 2019 whether or not they anticipate a future sale. In the event of such a sale, the value at that date would be used to calculate the taxable gain.”
It will still be necessary to distinguish between residential and commercial property for the purposes of applying the higher CGT rates to upper rate gains for individuals.
Where the disposal is a direct disposal that gives rise to a residential property gain, the gain would be chargeable at 18% or 28%. For a direct disposal of other UK land that rate would be 10% or 20%.
Where the disposal is an indirect disposal of any UK land the rate would be 10% or 20%.
When determining the rate of non-resident CGT for individuals, consideration is taken in the same way as for UK residents of the amount of income taxable in the UK or other gains to determine whether any part of an individual’s gains are taxed at the lower rate of 10%/18% or the higher rate of 20%/28%.