CGT on non-resident trusts

By Tolley

The following Trusts and Inheritance Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • CGT on non-resident trusts
  • Non-residents’ liability for CGT
  • Application of the non-residents’ rule to trusts
  • Assets on which non-residents are charged to CGT
  • Rates of tax and the annual exemption
  • Losses
  • Interaction with other CGT provisions
  • Calculation of the charge
  • Compliance

Non residents liability for CGT With effect from 6 April 2019 a person who is not UK residentfor a tax year is chargeable to capital gains tax on gains accruing within the year on disposals of assets which are situated in the UK and used in the trust s UK branch or agency ie for the purposes of a trade profession or vocation in the UK interests in UK land or assets which derive at least 75 of their value from UK land eg company shares and the trust has a substantial indirect interest in the land This might be for example a 25 investment in a company holding UK land TCGA 1992 s 1A 3 from 6 April 2019 TCGA 1992 ss 10 14B up to 5 April 2019 The default position is that CGT is charged only on UK residents on the disposal of chargeable assets The charge on non residents trading through a UK branch or agency is a long standing exception to the general rule A charge on non residents gains on residential property was introduced with effect from 6 April 2015 This application of the tax to interests in land was broadened considerably by FA 2019 to include interests in all UK land both residential and commercial In addition the extension covered significant holdings in property rich companies Definitions of the assets now subject to the charge on non residents are described in more detail below Application of the non residents rule to trusts The territorial scope of CGT applies to all persons a term which includes individuals companies trusts and personal representatives The residence of a trust is determined by the residence of its trustees who are treated as a single person See the UK tax position of non residenttrusts guidance note Therefore a trust which meets the conditions of a non UK residenttrust is covered by the non residents CGT rule in the same way

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