UK Property Fact Sheet – UK Capital Gains Tax
The landscape is changing for non-residents (individuals and structures) holding UK Property.
This fact sheet is a summary only. Please contact us for further advice if you think this issue affects you.
What is UK Capital Gains Tax?
This is a tax on any profit made when a UK property is sold.
It has always been based on UK residency but from 6 April 2015 non-residents will also have to pay capital gains tax.
The good news is that only increases in value from 6 April 2015 until the date of sale will be considered – all increases in value up to 6 April 2015 from the date of purchase will be ignored.
What should I do?
We recommend obtaining a valuation during 2015 to demonstrate clearly in the future the value at 6 April 2015.
Keep a clear record of any costs incurred on each property to include the nature, date and amount of the cost. Capital costs can be added to the initial cost to reduce your eventual profit on sale.
Let us know if you have sold a UK property or are planning to and provide us with the completion statement.
What will I pay?
This depends whether the UK property is held by an individual, company or Trust.
A high value property owned by a company (over £500k) and used by (or available to be used by) the beneficial owner will be taxed at 28%.
A property owned by an individual or Trust will be taxed at either 18% or 28% depending on whether the individual or Trust has other UK income. An individual receives an annual exemption of (currently £11,000 14/15). A Trustee receives half an exemption (£5,500 14/15). This amount of gain can be earned tax free each year.
A property owned by a company of low value (under £500k) or one which is rented out commercially will be taxed at 20%. No annual exemption is available but there is an ‘Indexation Allowance’ which takes into consideration RPI increases in the cost over time and so reduces the gain.
Is it just when I sell a UK property?
No, a gain can also arise when you give away an asset to a relative or to a structure you control although gifts between spouses are ok.
A gain can also arise if you part with only some of the asset (so, for example, selling off a wing or garage) or if the property is destroyed in some way and you receive insurance proceeds.
Are all UK properties caught?
The tax is designed to catch all property that could be used as a dwelling (residential property) even if let commercially. Commercial property is not caught.
What happens if I make a loss?
If you make a loss when you sell a UK property then it is important to let us know the details because capital losses can be used to set off against any capital gains made in the same year or carried forward to be used against gains in future years.
Is there a reporting deadline?
Yes, if you already have a UK tax number and are known to HMRC then the deadline is either that for self-assessment or corporation tax however if you are not yet known to HMRC the reporting (and payment) deadline is only 30 days.
Who should I contact?
Danielle Bennett or Chantelle Le Tissier
Email [email protected] or [email protected]