The rules for tax on UK property disposals for non UK residents have changed significantly in the last few years.  Previously if you disposed of an asset in a year where you were non UK resident and you remained non UK resident for tax purposes for 6 years from the date of departure, no UK Capital Gains Tax (CGT) would normally be payable on that disposal, however this changed for UK residential property in April 2015 and there are now further changes to consider for all UK property disposals after April 2019.

UK residential property – from 6th April 2015

The default position for non UK residents making such a disposal is to ‘rebase’ the property to its market value at 6 April 2015 and charge UK CGT on the gain realised in excess of this value, after deduction of any allowable costs.  If it is more beneficial, there is also the option to calculate the gain as if it were always subject to UK tax but then ‘time apportion’ the whole gain over the period of ownership so that only the increase in value post 6th April 2015 becomes chargeable.

When the rules changed we recommend that clients obtained a valuation on the property at that point so that should it be required in future it can be easily found and used in future computations.  If the value of the property has increased substantially after April 2015, there may be a UK tax liability.

UK commercial property = from 6th April 2019

From 6th April 2019 the rules have been extended to disposal of all UK based property, so disposal of A commercial property is also now taxable in the UK in the same way that UK residential property is, even if you are not living here yourself. Commercial property should be valued at 5th April 2019 and only gains in value since that date will be charged, although an election can be made to use the total gain/loss since acquisition if it works out better.

Substantially shorter time limits to pay tax due

Prior to 6th April 2019, when the UK property is sold a Non Resident CGT Return (NRCGTR) had to be submitted to the UK tax authority within 30 days of the sale and if you were still completing a UK tax return at the point of sale, any CGT details would be entered onto your tax return and tax would be payable at 31st January following the tax year end as normal.

Since 6th April 2019 the new rules require that any UK property disposal has to be declared to HMRC within 30 days and the tax must also be paid within 30 days of completion.  There is no longer a choice to settle the tax alongside your personal tax return.  Whilst this may feel harsh HM Revenue & Customs are of the opinion that in many cases the funds for the disposal have been received at this point so they want their bite of the cherry sooner and before finds are re-invested and possibly no longer available.

What needs to happen now

It is important to let us know as soon as you are in the process of selling a property so that we can be ready to help you declare the gains and pay the tax due to HM Revenue & Customs within the 30 day time limit.

Many expenses such as original costs of purchase or capital improvements made since you acquired the property can be deducted in the CGT computation and it can be time consuming to collate this.  Although HM Revenue & Customs have agreed to accept reasonable estimates, to prevent unnecessary pressure in the 30 day time span we recommend that you complete and return to us the attached general information sheet for any UK property owned so that we have the information on file ready to use and to be able to rapidly and more accurately quantify the tax you may need to pay.

If you own a commercial property it may be advisable to also get a valuation dated 6th April 2019 so that this figures is readily available in the event of a future sale.  The closer to 6th April 2019 this figure is obtained the easier it will be to quantify the correct value and the more accurate it is likely to be, compared to trying to obtain a value many years in the future!

If you need any more advice and guidance on this topic, please get in touch with our team using the form below. 

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