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Non-Resident Capital Gains Tax - What You Need To Know

From 6 April 2015, if you are not resident in the UK and you sell a UK residential property you may have to pay Capital Gains Tax (CGT) on any gains you make. These changes have been introduced to correct the current imbalance between the tax treatment of UK residents and non-residents.

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 or less persons)
  • any of the above who are partners in a partnership

CGT is a tax on the gain in value of an asset, from the time at which you acquired it through to when you dispose of it.

However under the new Non-Resident Capital Gains Tax (NRCGT) rules, not all of the increased value is subject to CGT – only gains made after 5 April 2015.

The rate of tax for non-residents is the same for UK residents and Trusts – 18% or 28% for individuals and 28% for trusts. Similarly the exemption limit is also the same, set at £11,100 for individuals and £5,500 for trusts.

If, however, the property decreased in value before the 6th April, after which time it began to increase, these fluctuations can be offset against one another, reducing any potential NRCGT liability.

Private residence relief may also be available, but there are conditions around occupancy.

The changes will apply to any property sold from 6 April, 2015. Any sale made after this date will need to be reported on a NRCGT return (even if you have made a loss) and any CGT due will need to be paid within 30 days of the date of the property sale.

If you would like any further information, or to discuss your individual tax requirements, contact Linda Reid on lreid@pagan.co.uk or call 01334 659729.

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