UK Residential Properties – New CGT rules for Non-residents

From 5 April 2015 a new capital gains tax charge applies to non-residents disposing of UK residential property.

Fortunately, only the gain that arises after this date is assessable to the new tax. The default way to calculate the chargeable and non-chargeable gain is to obtain a professional valuation as at 5 April 2015; with only the increase in value after this date being chargeable to tax.

It may be possible to attract principal private residence (‘PPR’) relief to reduce the gain, if the individual stays in one of their UK properties for 90 days or more.

What do clients need consider before 5 April 2015?

  • If the property is to be sold shortly, try and push the sale through before 5 April 2015 thus avoiding professional valuation costs;
  • Look at the day count for 2014/15 and consider advising clients to satisfy the 90 day rule to ensure it is their PPR at some point;
  • Consideration must be given to what effect occupying the property has on UK residence under the Statutory Residence Test;
  • Offshore trustees should keep a record of occupation by a beneficiary as well as day-count records;
  • It is not necessarily beneficial to obtain a professional valuation as at 5 April 2014 contemporaneously. A historical valuation undertaken later can often give a more favourable result – look at 31 March 1982 valuations!

 

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