HMRC internal manual

Capital Gains Manual

CG73782 - Non-Resident Capital Gains Tax (NRCGT) – Disposals on or after 6 April 2015 to 5 April 2019: Individuals: Special rules, and computation: Default method computation, examples

1. Property is a residential property throughout ownership

2. Property not always a residential property

3. Pre-April 2015 gain and post-April 2015 loss

4. Pre-April 2015 loss and Post-April 2015 gain

1. Property is a residential property throughout ownership

Basic information:

Interest acquired 6 April 2012 for £300,000 and disposed of 5 April 2017 for £350,000

Wholly used (or suitable for use) as a dwelling throughout ownership period

Market value at 5 April 2015 £330,000

No election made under Para 2(1)

Total number of days in post-commencement ownership period 730

Total number of days within that period where the property was used wholly or partly as a dwelling 730

Calculating the NRCGT gain or loss

Stage 1

Notional post-April 2015 gain or loss

Disposal proceeds £350,000

Market Value at 5 April 2015 £330,000

Notional post-April 2015 gain £20,000

Stage 2

RD = 730

TD = 730

RD/TD x Notional post-April 2015 gain = £20,000

NRCGT gain £20,000

Calculating the gain or loss which is not an NRCGT gain or loss

The part of the gain which is not an NRCGT gain will not be subject to CGT unless it is brought into charge by other provisions. This second part of the computation will therefore not be strictly necessary for many people.

Step 1

Determine the amount of the notional pre-April 2015 gain or loss

Market Value at 5 April 2015 £330,000

Allowable deductions £300,000

Notional pre-April 2015 gain £30,000

Step 2

Determine the amount of the post-April 2015 gain remaining after the deduction of the NRCGT gain

Notional post-April 2015 gain £20,000

NRCGT gain £20,000

£0

Step 3

Not relevant as there is no post-April 2015 loss

Step 4

Add Step 1 to Step 2

Step 1 £30,000

Step 2 £0

Gain which is not an NRCGT gain £30,000

Summary

Total gain throughout ownership period £50,000

(Disposal proceeds of £350,000 less allowable deductions of £300,000)

Divided into:

NRCGT gain £20,000

Gain which is not an NRCGT gain £30,000

2. Property not always a residential property

Basic information:

The same as example 1 except property is only wholly or partly used (or suitable for use) as a dwelling for 1 out of the 2 post-April 2015 years

Total number of days in post-commencement ownership period 730

Total number of days within that period where the property was used wholly or partly as a dwelling 365

Calculating the NRCGT gain or loss

Stage 1

Notional post-April 2015 gain or loss

Disposal proceeds £350,000

Market Value at 5 April 2015 £330,000

Notional post-April 2015 gain £20,000

Stage 2

RD = 365

TD = 730

RD/TD x Notional post-April 2015 gain = £10,000

NRCGT gain £10,000*

*If there was mixed use of the property in the post-commencement ownership period, the NRCGT gain (or loss) would need to be further apportioned on a just and reasonable basis. So, for example, if the property was half used as commercial premises and half as a dwelling, the NRCGT gain might be £10,000 x 50% = £5,000

Calculating the gain or loss which is not an NRCGT gain or loss

Step 1

Determine the amount of the notional pre-April 2015 gain or loss

Market Value at 5 April 2015 £330,000

Allowable deductions £300,000

Notional pre-April 2015 gain £30,000

Step 2

Determine the amount of the post-April 2015 gain remaining after the deduction of the NRCGT gain

Notional post-April 2015 gain £20,000

NRCGT gain (assuming no mixed use) £10,000

£10,000

Step 3

Not relevant as there is no post-April 2015 loss

Step 4

Add Step 1 to Step 2

Step 1 £30,000

Step 2 £10,000

Gain which is not an NRCGT gain £40,000

Summary

Total gain throughout ownership period £50,000

(Disposal proceeds of £350,000 less allowable deductions of £300,000)

Divided into:

NRCGT Gain £10,000

Gain which is not an NRCGT gain £40,000

3. Pre-April 2015 gain and post-April 2015 loss

Basic information:

The same as example 1 except market value at 5 April 2015 is £375,000

Calculating the NRCGT gain or loss

Stage 1

Notional post-April 2015 gain or loss

Disposal proceeds £350,000

Market Value at 5 April 2015 £375,000

Notional post-April 2015 loss (£25,000)

Stage 2

RD = 730

TD = 730

RD/TD x Notional post-April 2015 loss = £25,000

NRCGT loss (£25,000)

Calculating the gain or loss which is not an NRCGT gain or loss

Step 1

Determine the amount of the notional pre-April 2015 gain or loss

Market Value at 5 April 2015 £375,000

Allowable deductions £300,000

Notional pre-April 2015 gain £75,000

Step 2

Not relevant as there is no post-April 2015 gain

Step 3

Determine the amount of the post-April 2015 loss remaining after the deduction of the NRCGT loss

Notional post-April 2015 loss £25,000

NRCGT loss £25,000

£0

Step 4

Add Step 1 to Step 3

Step 1 £75,000

Step 3 £0

Gain which is not an NRCGT gain £75,000

This gain is not chargeable unless it is brought into charge by other provisions. The default method of computation therefore may be the most advantageous method for the taxpayer in this example.

Summary

Total gain throughout ownership period £50,000

(Disposal proceeds of £350,000 less allowable deductions of £300,000)

Divided into:

NRCGT loss (£25,000)

Gain which is not an NRCGT gain £75,000

4. Pre-April 2015 loss and Post-April 2015 gain

Interest acquired 6 April 2010 for £300,000 and disposed of 5 April 2017 for £410,000.

Wholly used as a dwelling throughout ownership period

Market value at 5 April 2015 £260,000

No election made under Para 2(1)

Total number of days in post-commencement ownership period 730

Total number of days within that period where the property was used wholly or partly as a dwelling 730

Calculating the NRCGT gain or loss

Stage 1

Notional post-April 2015 gain or loss

Disposal proceeds £410,000

Market Value at 5 April 2015 £260,000

Notional post-April 2015 gain £150,000

Stage 2

RD = 730

TD = 730

RD/TD x Notional post-April 2015 gain = £150,000

NRCGT gain £150,000

Calculating the gain or loss which is not an NRCGT gain or loss

Step 1

Determine the amount of the notional pre-April 2015 gain or loss

Market Value at 5 April 2015 £260,000

Allowable deductions £300,000

Notional pre-April 2015 loss (£40,000)

Step 2

Determine the amount of the post-April 2015 gain remaining after the deduction of the NRCGT gain

Notional post-April 2015 gain £150,000

NRCGT gain £150,000

£0

Step 3

Not relevant as there is no post-April 2015 loss

Step 4

Add Step 1 to Step 2

Step 1 £40,000

Step 2 £0

Loss which is not an NRCGT loss £40,000

Summary

Total gain throughout ownership period £110,000

(Disposal proceeds of £410,000 less allowable deductions of £300,000)

Divided into:

NRCGT gain £150,000

Loss which is not an NRCGT loss (£40,000)

In these circumstances it may be beneficial for the taxpayer to consider an election for one of the alternative methods of computation e.g. straight-line time apportionment under Para 2(1)(a). See CG73785 onwards.