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CGT Changes at Home and Away: Revisited

Carl Bayley BSc ACA looks at Government's proposals to tax non-UK residents on UK residential property gains - plus some of the 'knock-on effects' for UK investors.

In December, Government published details of its proposed new tax charge on non-UK residents disposing of UK residential property. As expected, the new charge will have a major impact on non-residents investing in UK property and on the planning issues facing any investors intending to emigrate in the future. What comes as more of a surprise is the extent to which the new legislation will also affect UK resident property investors.

The charge
The basic principle of the new charge remains unchanged from previous announcements: from 6th April 2015, non-UK residents will be taxed on gains on UK residential property. Only the part of the gain arising after 5th April 2015 will be subject to tax (unless the taxpayer elects otherwise).

The charge will apply to non-resident individuals and trusts, as well as some non-resident companies. Individuals will pay Capital Gains Tax ('CGT') at normal rates and will be entitled to the annual exemption. As with other gains, trusts will pay CGT at 28% and be entitled to a reduced annual exemption.

Non-resident taxpayers who are already in the UK Income Tax self-assessment system will need to report their chargeable gains through that system and pay the tax due by the normal date: 31st January following the relevant UK tax year.

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