From 6 April 2019, a single capital gains tax regime applies to all UK land owned by non-UK residents. Marilyn McKeever explains the most significant changes.

Extension to commercial property

Non-resident capital gains tax (NRCGT) previously applied only to UK residential property. From 6 April 2019, it extends to all UK real estate — residential and commercial alike.

Indirect disposals

The new rules also apply to the sale of shares in a "land-rich" company: one where at least 75% of its value derives from UK land. A shareholder who owns at least 25% of such a company (aggregating connected shareholders' holdings) will be subject to NRCGT on the sale of those shares. This applies to widely held companies, not just family structures.

Reporting and payment

Non-UK residents selling UK residential property have been required to submit an NRCGT return within 30 days of completion since 2015 — and pay any tax due at the same time. These reporting obligations now extend to all UK real estate and indirect disposals. From April 2020, UK residents must also pay CGT on residential property sales within 30 days of completion.

Rebasing

Gains on commercial property and property-owning companies are only taxable to the extent they accrued after 6 April 2019. Properties acquired before that date are treated as if purchased at market value on that date.

Collective investment schemes

The default position would result in double taxation for offshore collective investment schemes and their exempt investors such as charities and pension funds. Two elections — a transparency election and an exemption election — are available to address this.

Property taxation is complex. If you would like advice on how these changes affect your position, please contact us.