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Non-Resident Capital Gains Tax (CGT) on Property

Non-UK residents will from 6 April 2019 must pay Capital Gains Tax (CGT) on the disposal of UK real estate.

Prior to the legislation CGT on real estate for non-residents was only on disposals of residential property. Moving forward CGT will be applied to all UK land (including commercial).

Indirect disposals

The CGT will also be applied where a non-resident indirectly disposal of property. For example, the disposal of a company, share sales or trusts.

Indirect disposals will be taxable if the following two conditions are met on the date of the disposal:

  • The entity being disposed of is ‘property rich’
  • The non-resident holds 25% or more interest in the entity or has done in the past 5 years.

Property-rich test

The property rich test will apply (at the time of disposal) if 75% or more of the asset value is derived from UK property. The property rich test is applied to the gross value of the entity at the time of disposal. Please note mortgage, interest is not deductible from the gross profit calculation.

Indirect disposal of group entities

The property rich test should be applied to the disposal of groups of companies and trusts. If a non-resident disposes of shares of a holding company that was not property rich but owns a company that is – both companies would be used to determine whether the 75% property rich test was met.

Summary

You need to complete a non-resident CGT return when you sell or dispose of any UK property or land after April 2019 HMRC must be notified within 30 days of the conveyance date using HMRC’s online form.

The following must complete an NRCGT return:

  • a non-resident individual including those who are in partnership
  • a personal representative of a non-UK resident who has died
  • a non-resident who is a non-corporate landlord or trustee
  • a UK resident meeting split year conditions and the disposal is made in the overseas part of the year

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