78: Non-residents disposing of UK property – 10 things you need to know (Part 1)

On 23 November last year the Government published a consultation document in relation to its proposal to impose a UK tax charge on all non-residents disposing immovable property (ie UK land and buildings). In this blog post and the next we will be summarising ten key points in relation to this proposal.

1. From April 2019 UK tax will be charged on gains made by all non-residents on the disposal of all types of interest in UK land and buildings.
2. For the first time non-residents will be chargeable to UK tax on gains accruing on the disposal of interests in non-residential (ie commercial) property.
3. Where a disposal of non-residential property is by a non-resident company, it will be subject to corporation tax on the gain (current rate of 19%, falling to 17% from April 2020). All other non-resident persons (ie individuals, trusts and personal representatives) will be subject to the UK capital gains tax (CGT) regime.
4. The existing non-resident capital gains tax (NRCGT) regime which was introduced in April 2015 in relation to disposals of residential property by non-resident close-companies (not otherwise subject to ATED-related CGT), individuals and trusts will be extended to ‘widely-held’ companies (ie funds and other structures with five or more participators).
5. The new rules are likely to mean the end of ATED-related CGT from April 2019, if not before, in an acknowledgment of the complexities which surround this tax and the desire to harmonise the tax rules in relation to UK immovable property going forward.

COMMENT

Although a consultation document was published, the actual scope, commencement date and shape of the proposed rules appear somewhat settled, with the Government only seeking views on the mechanics of imposing this new charging regime. The consultation period is now closed and we currently await the outcome of this and further clarity from the Government in relation to the likely shape of the new rules.

Read more on this proposal in the next blog post.