Capital Gains Tax (CGT) updates for non-UK residents selling UK residential property

The Finance Bill 2016 will introduce some (positive) changes to how CGT is calculated and recorded when a non-UK resident disposes of UK residential property. These include:

  • measures (with retrospective effect from 6 April 2015) to remove a double charge that occurs in some circumstances when CGT is calculated on the disposal of a UK residential property
  • powers to prescribe circumstances when a CGT return is not required by non-residents

CGT being added to the list of taxes that the Government may collect on a provisional basis.

The charge to CGT for non-UK residents disposing of UK residential property was only introduced very recently (Finance Act 2015 – include link to relevant update). Given the complexity of this tax and its calculations, it is hardly surprising that there have been some “teething issues” and amendments to procedures and calculations have been required.

A payment window for CGT

From April 2019, a payment on account of any CGT due on the disposal of residential property will be required to be made within 30 days of the completion of the disposal, a measure that will accelerate tax receipts. Currently, no such payment is required and the tax is payable in full on or before 31 January following the end of the tax year of disposal. The Government will publish draft legislation for consultation in 2016.

CGT and entrepreneurs' relief

After restricting the availability of entrepreneurs’ relief in the 2015 Budget this Autumn Statement saw the Government adopting a more lenient tone in another example of George Osborne’s new listening approach.

The Government announced that it will now consider bringing forward legislation to amend the changes made by the Finance Act 2015 to entrepreneurs’ relief, in order to support businesses by ensuring that the relief is available on certain genuine commercial transactions.

The Finance Act 2015 made a number of changes to entrepreneurs' relief, including removing relief for the value of goodwill realised on incorporation, and changes to the rules on associated disposals. The Government is reacting to claims (from professional bodies) that these changes as introduced are restricting the use of entrepreneurs’ relief, especially amongst genuine retirements from family companies and partnerships.