New Capital Gains Tax rules affecting British expats and non-UK residents with UK property.
Capital gains tax (CGT) becomes due as a result of a financial gain (often referred to as profit) received once an asset is sold or disposed of. The amount is calculated by subtracting the sale value from the original purchase value.
From 6 April 2015, overseas residents will be liable to pay CGT on the adjusted profit arising from a disposal (sale) of a UK property. The profit that will be liable to tax will only relate to any increases in the property’s value post the introduction date; any profit arising before that date will not be taxable.
The tax to individuals will be charged at 18% for lower rate tax payers and 28% for higher rate tax payers and properties held under Trusts. Companies will be charged at 20%.
The new rules will affect:
- non-resident individuals
- non-resident trustees
- personal representatives of non-resident deceased persons
- certain non-resident companies (generally those controlled by 5 persons or fewer)
- some UK resident individuals disposing of UK property when abroad
- any of the above who are partners in a partnership.
If you are a non-UK resident and you currently own property in the UK or have bought property off-plan that has yet to be built, it is very likely that you will become liable for CGT when you sell the property.
Whether a sale is being made now or in the future, it is recommended that a valuation is carried out at the earliest opportunity while market evidence is fresh, although a valuation can also be completed retrospectively when deciding to sell.
The valuation should be carried out by a RICS qualified professional as evidence of the value of the investment at 6 April 2015, because this would be expected to hold more weight with HMRC than an estate agency market appraisal.