UK Government seeks the best way to implement a capital gains tax charge on non-residents

UK Government seeks the best way to implement a capital gains tax charge on non-residents

On 28 March 2014, the UK government published long awaited consultation paper with details of its plans to extend capital gains taxation (CGT) on non-UK residents who dispose their UK residential property. This tax measure was previously announced in the Chancellor of the Exchequer’s Autumn Statement speech in December 2013 and then confirmed in the UK budget for 2014.

The document proposed to make non-UK resident individuals, companies, trusts and non-resident partners in UK partnerships pay CGT on investment gains from UK property which is used, or has the potential to be used, as a dwelling.

Individual non-UK resident taxpayers will pay CGT at the same rate as is applied to most UK residents (a maximum rate of 28%) and will also receive an annual CGT allowance (currently £10,900).

As for legal entities owning UK residential property, it is planned to apply a special CGT regime (the ‘tailored charge’) to them, at a rate of tax yet to be announced.

The consultation closes on 20 June 2014. Draft legislation is expected to be introduced by the end of this year. It will be effective from 6 April 2015 and apply only to gains arising from that date.

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