Overview of the rules on disposals of interests in UK land by non-residents

Prior to April 2013, non-resident companies were typically not within the scope of UK corporation tax on chargeable gains, save in respect of capital assets which were used as part of a UK permanent establishment. This offered a particular incentive to non-resident companies investing in UK land. However, from April 2013, there has been a gradual erosion of this tax benefit.

The following legislative measures have diminished the attractiveness of investing in UK immovable property for non-resident persons:

• •from 6 April 2013, disposals of high value UK residential property by non-resident companies, partnerships with a corporate member and collective investment schemes became subject to CGT at a rate of 28% where the property was chargeable to the annual tax on enveloped dwellings (ATED-related gains). For more on the ATED charge and the ATED-related CGT charge, see the Overview of the ATED regime guidance note and Simon’s Taxes C2.1125–C2.1129A (both subscription sensitive)
• •from 6 April 2015, a CGT charge applied more generally to non-UK residents disposing of UK residential property. The charge applied to a much broader class of non-UK residents and irrespective of the value of the residential property held. From this date, non-UK resident individuals, closely-held companies, trustees, personal representatives and funds disposing of UK residential property were within the scope of CGT. See the Capital gains tax charge on UK residential property owned by non-residents guidance note and Simon’s Taxes C2.1130–C2.1135 (both subscription sensitive) for further details

Following consultations in March  and November  2017, the Government introduced legislation in FA 2019, Sch 1, to further extend the scope of UK tax on non-residents holding interests in UK land (referred to in the remainder of this guidance note as the ‘FA19 NRCGT regime’).

The changes bring