Capital Gains Tax: disposals of UK residential property by non-residents
Published 9 December 2015
© Crown copyright 2015
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This publication is available at https://www.gov.uk/government/publications/capital-gains-tax-disposals-of-uk-residential-property-by-non-residents/capital-gains-tax-disposals-of-uk-residential-property-by-non-residents
Who is likely to be affected
Non-UK resident persons that own UK residential property, in particular:
- non-UK resident individuals
- non-UK resident trusts
- personal representatives of a deceased person who was a non-UK resident
- non-UK resident companies controlled by five or fewer persons, except where the company itself, or at least one of the controlling persons, is a ‘qualifying institutional investor’
UK resident individuals that dispose of UK residential property in the overseas part of a split year.
General description of the measure
This measure amends the Capital Gains Tax (CGT) provisions in relation to disposals of UK residential property by non-residents (NRCGT). It corrects the computations required in relation to a disposal and gives HM Revenue and Customs (HMRC) powers to prescribe circumstances when an NRCGT return is not required to be made. It also adds CGT to the list of taxes that the government may collect on a provisional basis between Budget day (or a day after Budget), and the coming into operation of the subsequent Finance Act.
Policy objective
NRCGT improves the fairness of the tax system by addressing what was an imbalance in CGT treatment between UK residents and non-residents disposing of UK residential property. This measure makes minor changes to maintain this fairness.
Background to the measure
NRCGT was introduced from 6 April 2015 following an announcement in 2013 and consultation during 2014.
Detailed proposal
Operative date
Amendments to the computations to put beyond doubt that a double charge does not arise will apply retrospectively to disposals made on or after 6 April 2015 and, in relation to an omission in how to compute the balancing gain, to disposals made on or after 25 November 2015.
HMRC powers to prescribe circumstances when an NRCGT return is not required to be made will be introduced from Royal Assent of the Finance Act 2016.
CGT will be included in the list of taxes that the government may collect on a provisional basis from Royal Assent of the Finance Act 2016.
Current law
Schedules 4ZZA and 4ZZB to TCGA 1992 apply for the purpose of determining the amount of gain or loss that accrues to a person on property which has been subject the annual tax on enveloped dwellings and the amount of NRCGT gain or loss that accrues.
The requirement to make and deliver an NRCGT return is set out at section 12ZB of the Taxes Management Act (TMA) 1970.
Taxes are collected on a provisional basis under the Provisional Collection of Taxes Act (PCTA) 1968.
Proposed revisions
Legislation will be introduced in Finance Bill 2016 to amend Paragraph 2(1) of Schedule 4ZZA to TCGA 1992 to make clear that it is the special rule at paragraph 6A (special rule for certain disposals to which both Schedule 4ZZA and 4ZZB relate) that takes precedence over paragraphs 3 and 4 (disposals with rebasing) and not paragraph 6 (cases with an election not to rebase or where rebasing does not apply).
Paragraph 17 of Schedule 4ZZB to TCGA 1992 will be amended to ensure that any notional pre-April 2013 gain or loss is identified as part of the balancing gain in all circumstances.
Section 12ZB of TMA 1970 will be amended so that HMRC may prescribe by regulation circumstances when the requirement to make and deliver a NRCGT return does not apply. Draft regulations will be published in early 2016.
Section 1 of PCTA 1968 will be amended to include CGT.
Summary of impacts
Exchequer impact (£m)
| 2015 to 2016 | 2016 to 2017 | 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 |
|---|---|---|---|---|---|
| nil | nil | nil | nil | nil | nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
This measure will only affect a small number of non-resident individuals who own UK residential property and UK residents that have property held in offshore entities. The measure is expected to have a negligible impact on the number, amount or costs involved.
The measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
This measure is not expected to have a disproportionate impact on any protected group.
Impact on business including civil society organisations
This measure is expected to have a negligible impact on businesses and civil society organisations.
Operational impact (£m) (HMRC or other)
No significant impact is envisaged.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be kept under review through communication with affected taxpayer groups.
Further advice
If you have any questions about this change, please contact Alan McGuinness on Telephone: 03000 585256 or email: alan.mcguinness@hmrc.gsi.gov.uk.