The measure also extends the charge on gains on disposals of interests in residential property to diversely held companies and to life assurance companies.

HMRC says that the aim of these new rules is to level the playing field between UK residents and non-UK residents on disposals of UK immovable property.

The measure was originally announced at Autumn Budget 2017, was consulted on from November 2017 to February 2018 and will become effective for disposals made on or after 6 April 2019.

This proposal is expected to affect:

• non-resident individuals and trusts, who will pay CGT for direct disposals of UK non-residential property for the first time; and
• non-resident individuals and trusts, who will pay CGT on gains for indirect disposals  for the first time

These individuals and trusts are expected to incur one-off costs of familiarisation with the new rules, valuation of property, registering for CGT and setting up all the systems and processes needed in order to calculate and pay CGT.

HMRC has also published draft legislation requiring individuals and trustees disposing of a residential property to make a payment on account of the CGT within 30 days of the completion of the sale. Sellers will have to calculate, report and pay the CGT that they believe is due within that window.

For UK residents, the measure will have effect for disposals made on or after 6 April 2020. For non-UK residents changes have effect for disposals on or after 6 April 2019 and 6 April 2020.

Policy paper: Capital Gains Tax and Corporation Tax on UK property gains is available here. 

Report by Amy Austin