On 3 December 2014, the Chancellor delivered his 2014 Autumn Statement. There are some unpleasant surprises for non residents who will have to pay Capital Gains Tax on residential property.

1.            Capital Gains Tax for Non-Residents Owning UK Residential Property

Non-residents who own residential property in the UK will be liable to Capital Gains Tax.

The charge will apply to disposals of UK residential property;  that is property suitable for use as a dwelling. There will be an exemption for certain large scale institutional investment, subject to passing a “narrowly controlled company test” that will work alongside a “genuine diversity of ownership” test.

This new charge will not change anything to the existing ATED regime (for offshore companies owning UK residential property in effect for own use/ use of connected parties), but it will only apply to properties that are not caught by ATED.

CGT will be not be due to the amount of the gain relating to periods prior to April 2015 through a system of rebasing or time-apportionment of the whole gain.

The rate will be the same as the CGT rates for UK individuals (18% or 28%, depending on the person’s total UK income & chargeable gains for the tax year, with an annual exemption). The rate for companies will be the same as for UK companies (currently 20%).

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