Currently for non-UK residents, Capital Gains Tax only applies to disposals of UK residential property. The new measure will have effect for disposals made on or after 6 April 2019 and will apply to all disposals of UK land by non-UK residents.
What does the change mean?
All non-UK resident companies, including close companies, will be charged to Corporation Tax rather than Capital Gains Tax on their gains.
The measure extends the charge on gains on disposals of interests in residential property to diversely held companies, those widely held funds not previously included, and to life assurance companies.
Indirect disposals of land are also caught by the rules. This means disposals of an interest in UK “property rich” entities, or a disposal of property held by a company in which an individual owns, or has owned in the last 2 years, at least 25%. Property rich is defined as 75% of the value of the company relates to UK land.
There will be a trading exemption so that disposals of interests in property rich entities that are trading before and after the disposal will not be chargeable disposals where the land is used in the trade.
There will be options to calculate the gain or loss on a disposal using the original acquisition cost of the asset or using the value of the asset at commencement of the rules in April 2019. Both options will be available for both direct and indirect disposals.
ATED CGT will be abolished.
If you would like further information please contact our Tax Manager, Hannah Roynon-Jones: