Non-Residents to be subject to Capital Gains Tax

Residence & Domicile Dec 5, 2013

One of the announcements made today in the Autumn Statement is that capital gains tax will be extended to non-residents who own residential property. This extends the previous measure to bring non-resident companies within the scope of capital gains tax on 'high value' residential property, measure that was introduced alongside the infamous ATED (Annual Tax on Enveloped Dwellings).

So now both high value and low value residential property gains will be taxed, regardless of whether the property is owned by a company or not. The change is to take effect in April 2015.

This move was expected but still, it could reduce confidence going forward. Non-residents were strongly encouraged by the Government to take their properties out of companies so that a future sale of bricks and mortar (rather than shares) is subject to stamp duty. In exchange they would not be subject to the annual charge (ATED) nor to the capital gains tax. Having de-enveloped as they were asked to do, they will in fact be subject to capital gains tax after all.

The Government will consult on how the tax can be collected from people outside the UK. Other countries like France tackle this problem by imposing a withholding tax on the notary who executes the sale and collects the sale proceeds. Perhaps the Government will require UK conveyancers to account for withholding tax on sales of property by non-residents. After all estate agents already claw back income tax for non-resident landlords not enrolled in the NRL scheme.


Franck Sidon

With over 15 years of experience as a Managing Director at TaxAssist Accountants, I have helped thousands of businesses and individuals achieve their financial goals and optimize their tax efficiency.