CG73785 - Non-Resident Capital Gains Tax (NRCGT) – Disposals on or after 6 April 2015 to 5 April 2019: Individuals: Special rules, and computation: Election for other forms of computation to apply in place of default method

It was recognised when the legislation was drawn up that some taxpayers might find it burdensome to have rebasing imposed on them. It could mean, in some cases, that the aggregate gains might be greater (or allowable losses less) than the single gain (or loss) that would accrue without rebasing. For some taxpayers the gain accruing on disposal of their assets might fairly be treated as having accumulated in a linear fashion, and it would be sufficient to determine their post-April 2015 gain by a simple ‘straight-line time apportionment’ of the appreciation of value of the asset over the entire period of ownership, without rebasing.

Sch 4ZZB/Part 2 permits a person who has held an asset prior to 6 April 2015 the option to elect not to use the default rebasing method for computing the amount of gains or losses from which the amount of non-resident CGT gains or losses are computed.

Sch 4ZZB/para 2 applies where a person makes a non-resident CGT disposal of (or of a part of) an interest in UK land that they held on 5 April 2015. It provides that the person may make an election to determine the amount of post 5 April 2015 gain or loss by using either the straight-line time apportionment method, or the retrospective basis of computation.

Sch 4ZZB/para 3 imposes various conditions on elections made under Sch 4ZZB/para 2 -

  • an election is irrevocable;
  • it must be made by being included either in a tax return for the tax year in which the person’s first disposal of the interest in UK land is made, or otherwise in the non-resident CGT return relating to the disposal.

HMRC must make all adjustments that may be required to give effect to an election, by discharge or repayment of tax, making assessments or otherwise.

It is made clear in Sch 4ZZB/para 2 that the person may not make an election for straight-line time apportionment if the disposal is one to which Part 4 of Sch 4ZZB applies (cases involving relevant high value disposals). Conversely, an election made under Sch 4ZZA/para 5 (which is tantamount to an election to use the retrospective basis of computation in the case of an ‘ATED-related’ disposal) applies as if it was also an election under Sch 4ZZB/para 2; that includes any such election made before the coming into force of Sch 4ZZB.

The consequences of making an election for straight-line time apportionment are explained in Sch 4ZZB/para 8; and for the retrospective basis of computation, in Sch 4ZZB/paras 5(1)(b), 9(1)(b), 13(1)(b), 14(1)(a) and 15(1)(c) (also Sch 4ZZA/para 6A(3)(c)).