UK Capital Gains Tax

Disposals made by non-UK residents of UK property

Recent changes to tax regimes that impact the sale of UK property.

Since 6th April 2019, the scopes of UK Capital Gains Tax (“CGT”) and UK Corporation Tax (“UKCT”) have been extended to now include gains realised by non-UK residents on both direct sales of UK property, and on the sale of interests held in companies which are deemed to be ‘UK property rich.’

What does this mean for non-UK persons and companies?

This extension now applies to the following scenarios:

1. Direct property holdings

  • Where a non-UK resident individual, company, or trust disposes of UK property which they own – whether the property is residential, or commercial.
  • Where commercial holdings have seen an increase in value since 6 April 2019, UK tax applies on the gain. For residential holdings, the taxable gain is calculated from 6 April 2015.

2. Indirect property holdings

  • If such a non UK resident sells an interest in a ‘UK property rich’ company (defined as 75% or more of the company’s value deriving from UK property), then any increase in value of the interest since 6 April 2019 is taxable.
  • This includes ‘indirect holdings’ of property rich companies, where the disposal could be of an interest held in a parent or holding company, where its subsidiary(s) in turn hold UK property. The non-resident (combined with any related parties) must hold, or at some point in the previous two years, must have held at least a 25% interest in the property rich company. Otherwise, the rules will often not apply. However, please note that where less than a 25% holding is held in a “Collective Investment Vehicle”, which includes, amongst other things, a holding in a UK REIT, a sale of that (less than 25%) interest will be subject to UK tax.

To help those impacted by the latest extensions, we have published a briefing paper on the subject to explain how and when these new regimes might apply, where there are exemptions and how to calculate the gains. We also discuss the reporting and payment obligations arising from these new rules.

Briefing Paper: Extension to UK Capital Gains Tax and UK Corporation Tax - what are your reporting obligations? [ 477 kb ]