Capital Gains Tax for non-residents changes

10-Jun-2015 Capital Gains Tax for non-residents - Click here for Government guidelines 

A new capital gains tax charge came into force on 6 April 2015: non-resident CGT (NR CGT). This could impact anyone who works as a property developers, conveyancing solicitor, as well as non-resident owners of UK residential property.
 
The NR CGT applies to gains made on the disposal of residential property in the UK by owners who are not resident for tax purposes in the UK. The new tax is restricted to gains that relate to the period from 6 April 2015 to disposal date, so it is unlikely to be payable on property sales made early in 2015/16.
 
However, the NR CGT reporting regime requires a NR CGT return to be made to HMRC within 30 days of the conveyance of the property. This applies whether there is any NR CGT to pay or not, where there is a loss on the disposal, and even where the taxpayer is due to report the disposal on their own personal or corporate self-assessment tax return or under the ATED regime.
 
A non-resident vendor who completes a residential property sale on say 1 May 2015 must complete the online NR-CGT return (you can do this on their behalf) by 31 May 2015. The non-resident vendor can be an individual, partner in a partnership, trustee, personal representative of non-resident who has died, a closely-held company or a fund.
 
Where the vendor is not registered for UK income tax, corporation tax or ATED, the NR-CGT charge must be paid with 30 days of the conveyance date. This payment can only be made once the NR-CGT return has been submitted and HMRC have replied with a reference number to use when making the payment. There are penalties for failing to file the NR CGT return on time, and failing to pay the tax on time.
 
If the taxpayer is registered for UK tax they can opt to pay the NR CGT due at the same time as the tax due for their normal self-assessment, so by 31 January 2017 for gains realised by individuals/ trustees/ PRs in 2015/16.
 
Conveyancing solicitors need to be aware of these new very tight reporting and payment deadlines. Property developers need to warn their non-resident customers that they will be liable to tax on any gain made when they sell the property and that gain includes any discount in the price achieved by buying “off-plan”.