View the related Tax Guidance about Non-resident capital gains tax (NRCGT)
UK filing requirements
UK filing requirementsOverview of UK filing requirementsAn overseas company may be required to file a number of UK tax returns with HMRC. This guidance note outlines the corporation tax and income tax filing requirements which an overseas company may have in respect of different types of income.See also Simon’s Taxes A4.1.The overseas company may wish to authorise a UK agent to act on its behalf, using the normal agent authorisation form 64-8.In addition, if an overseas company has employees who spend time in the UK (even for as little as 30 days), it may be required to file returns in respect of PAYE and National Insurance. See the Non-resident employers and liability to PAYE in the UK and Coming to the UK ― UK employment guidance notes. See Simon’s Taxes Division E8.7.Depending on the nature of its activities, an overseas company may also be required to file UK VAT or other indirect tax returns, eg a company which operates under a UK remote gaming license will be subject to gaming duties.Finally, an overseas company may be required to make non-tax filings, eg filing accounts with Companies House. See the Companies House website.Trading incomeIf the overseas company has a permanent establishment in the UK, then it will be subject to UK corporation tax in respect of the profits of the permanent establishment.See the Permanent establishment guidance note.From 1 April 2015, it will also need to consider the diverted profits tax (DPT) ― see the Introduction to the diverted profits tax
Introduction to capital gains tax
Introduction to capital gains taxIn general terms, a charge to capital gains tax arises when a chargeable person makes a chargeable disposal of a chargeable asset. The disposal may produce a profit (known as a gain) or a loss.See Checklist ― calculation of capital gains and losses for issues to consider when reporting client gains and losses.Chargeable personA chargeable person could be an individual, a trustee, a personal representative or a company, although companies are subject to corporation tax on chargeable gains not capital gains tax. For further discussion, see CG10700 and Simon’s Taxes C1.102. Exempt persons include, amongst others, charities (so long as the gain is applicable and applied for charitable purposes) and local authorities. See CG10760.Generally, if an individual is resident in the UK in the tax year they are chargeable to tax on capital gains arising in that tax year. See ‘Overseas aspects’ below for a discussion on the taxation of gains on non-resident individuals and those accessing the remittance basis of assessment. Chargeable disposalThe most common way for a person to dispose of an asset is to sell it to another person. However, a gift or an exchange also constitutes a disposal for capital gains tax purposes. There are provisions within the capital gains tax legislation that provide for the loss or destruction of an asset also to be treated as a disposal. For a list of other deemed disposals, see CG12703. Chargeable assetsAssets are
Use of capital losses
Use of capital lossesIf an individual sells a chargeable asset and makes an allowable loss, how can this be relieved?First of all, since the simplification of capital gains tax from 6 April 2008, the proforma to calculate a loss is the same as the proforma to calculate a gain. See the Basic calculation principles of capital gains tax guidance note for more details. Broadly, a loss arises if net proceeds after incidental costs of sale are less than the total of the acquisition costs plus any allowable enhancement expenditure. Usually, allowable capital losses are set against chargeable gains, reducing the amount of the gain.However, where a loss has been made on unquoted shares, the loss may be able to be set against income instead of gains. This is usually a more tax efficient use of the loss, as income is taxed at higher rates than capital gains. See the Losses on shares set against income guidance note for details of the conditions which must be met.Also, certain unused trading, post-cessation trading or employment income tax losses can be converted into capital losses in order to be set against the individual’s capital gains. The converted loss is regarded as a capital loss for the same tax year as the income tax loss arose, and takes priority over capital losses brought forward from earlier years. For details of the conditions that must be met and the amount of the loss that can be converted, see the Sole trader losses ― established
Gains attributable to participators in non-UK resident companies
Gains attributable to participators in non-UK resident companiesAs part of the changes introduced by FA 2019, Sch 1, TCGA 1992, Part 1 was rewritten. The new TCGA 1992, Part 1 largely restates the existing law but also includes additional provisions to bring disposals by non-UK residents of UK land from 6 April 2019 within the charge to tax. The rewrite was intended to modernise and simplify the structure of the UK capital gains rules as well as to accommodate the rules on disposals of interests in assets relating to UK land by non-UK residents. Where the legislation has been restated, the legislative links
Foreign capital gains and losses
Foreign capital gains and lossesThis note discusses the capital gains tax (CGT) position of the following categories of people:•resident and domiciled or deemed domiciled in the UK•resident but not domiciled or deemed domiciled•not resident in the UKThe note does not cover the position of temporary non-residents, who are those people who are no longer resident but remain within the scope of the UK CGT regime. See the Temporary non-residence and UK capital gains tax liability of temporary non-residents guidance notes.Guidance on reporting foreign capital gains and losses is given at the end of this note.Resident and domiciled or deemed domiciled in the UKAn individual who is UK resident and domiciled or deemed domiciled is taxed on their worldwide capital gains arising in the tax year. Any capital losses can be set against their gains, see the Use of capital losses guidance note. Residence status is determined in the same way for CGT and income tax, and is discussed in the Residence ― overview guidance note. For commentary on domicile status, see the Domicile and Deemed domicile for income tax and capital gains tax (2017/18 onwards) guidance notes. In other words, for the person who is UK resident and domiciled or deemed domiciled, it does not matter whether the gains are from foreign assets or UK assets. The only difference between UK and foreign gains is that, if they have suffered foreign tax on the capital gain, they can normally claim double tax relief. See the Foreign
Non-resident landlords ― choice of acquisition vehicle
Non-resident landlords ― choice of acquisition vehicleNon-resident investors that rent UK real estate are subject to tax on the rental income derived from the properties. The non-resident will also be subject to tax on any gain arising on the eventual disposal of the UK property. The tax consequences vary depending on the choice of vehicle used to acquire the property.This note considers the UK tax implications where the UK property is acquired by a non-resident that is:•a company •an individualRegardless of the choice of acquisition vehicle, the UK operates a withholding tax regime for rents payable to non-UK resident landlords known as the non-resident landlords scheme (NRLS). For more information on the scheme, see the Non-resident landlords scheme (NRLS) guidance note.The taxation of capital gains realised by non-resident investors on UK land or property has changed significantly from 6 April 2019. From that date, all disposals of UK property by non-residents (commercial or residential) are brought within the scope of UK tax. This includes direct disposals of UK commercial and residential land as well as disposals of interests in certain entities which derive 75% or more of their gross asset value from UK land. Prior to April 2019, it was generally only direct disposals of residential property that were subject to tax. These are briefly discussed below. For more information, see the Disposals of UK land by non-resident companies (NRCG regime) ― overview guidance note. It is also worth noting that if the
Utilising capital losses
Utilising capital lossesWhy capital losses are importantCapital losses are usually set against the capital gains that arise in the same year as the loss, reducing the total taxable gains for that year. Losses not used in this fashion are normally carried forward to be set against the next available gains.However, in certain circumstances, those losses may be blocked, restricted, carried back to earlier tax years or possibly treated as if they were income tax losses (see below).Where the taxpayer is subject to more than one rate of capital gains tax in a single tax year, they can choose which gains should be reduced by their capital losses so that their tax liability is reduced to the minimum possible.If a taxpayer makes a claim to defer chargeable gains for an earlier year, the use of losses may be disturbed, which can have a knock-on effect for several tax years.Capital losses must be quantified and claimed before they can be used. See the Use of capital losses guidance note for how capital losses arise and how to claim them.Identify special lossesWhere the taxpayer has made a capital loss, you first need to determine if the loss arises under one of the special circumstances that limit or expand the use of that loss, see below.EIS, SEIS or SITR investmentsEnterprise investment scheme (EIS) and seed enterprise investment scheme (SEIS) are designed to encourage investment by individuals in unquoted trading companies. The social investment tax relief scheme (SITR, also known as SI tax relief)
Timing of disposal for capital gains tax
Timing of disposal for capital gains taxDate of disposalThe date of the disposal determines the period in which the gain is subject to capital gains tax (CGT). When the rates of CGT change, the determination of the date of disposal can also affect the rate of CGT that applies to the gain.See the Introduction to capital gains tax guidance note.The rules for determining the date of disposal vary according to the type of disposal made.Type of disposalUnder contractWhere an asset is disposed of and acquired under a contract, the time of the disposal and acquisition is the time when that contract is made, ie the date contracts are exchanged. It is not the date of the completion of the contract, or time of the conveyance or transfer of the asset (if different). However, if the contract is never completed, the disposal never takes place. In the case of a conditional contract, the time of disposal and acquisition is the time when the condition is satisfied. This applies in particular to a contract that is conditional on the exercise of an option. For guidance on oral contracts, see CG14262.GiftsA gift is treated as having been made when the donor has done everything within their power to effectively transfer the property to the donee. However, other legal principles may override this. For example, a gift of land must be evidenced in writing, so the disposal date is the date of exchange of the written contracts.Where the gift consists of company shares,
Disposals of UK land ― capital gains tax compliance regime
Disposals of UK land ― capital gains tax compliance regimeBackgroundWhen the non-resident capital gains tax (NRCGT) rules were first introduced in respect of residential property in April 2015, for compliance purposes non-residents were divided into two groups: those within self assessment and those not within self assessment.Whilst both groups needed to file a NRCGT return within 30 days after the date of conveyance of the property, only those outside of the self assessment regime were required to make a tax payment by the same deadline. Those within self assessment did not need to make a tax payment until the normal due date under self assessment (ie 31 January after the end of the tax year). Understandably, this led to confusion for both taxpayers and advisers, and in 2015 the Chancellor committed to introducing a 30-day deadline for all.This deadline applied to those within the (widened) NRCGT regime with effect from 6 April 2019, and it applied to UK residents (and UK non-residents carrying on a trade via a UK branch or agency) disposing of UK residential property with effect from 6 April 2020. Note that this deadline is extended to 60 days for disposals that complete on or after 27 October 2021. The extension applies to disposals by both UK residents and non-residents and it follows a recommendation by the Office of Tax Simplification in May 2021. This regime should not be confused with the real time transaction tax return, which is a voluntary means of reporting the chargeable
Non-resident capital gains tax (NRCGT) on UK land ― individuals
Non-resident capital gains tax (NRCGT) on UK land ― individualsBackgroundHistorically, only UK resident individuals and entities, together with temporary non-UK resident individuals and those operating via a UK permanent establishment, branch or agency, were subject to UK capital gains tax (CGT), whilst non-UK residents were not. However, this was widened from 6 April 2013 to include disposals of UK dwellings owned by non-resident companies, partnerships and collective investment schemes where the dwelling was subject to the annual tax on enveloped dwellings (ATED) charge, which was subsequently repealed in April 2019 due to the introduction of the regime discussed below. For more on the ATED charge and the ATED-related CGT charge, see the Overview of the ATED regime guidance note.From 6 April 2015, the CGT regime was extended to non-UK residents disposing of UK residential property. This was known as the non-resident capital gains tax (NRCGT) regime. The NRCGT regime was rewritten and extended to cover both non-residential UK property and indirect disposals of UK property with effect from 6 April 2019, meaning all disposals of interests in UK land by non-residents are within its scope. To prevent confusion, these are referred to in this guidance note as the NRCGT 2015 regime and the NRCGT 2019 regime; however, you may also see them referred to as FA 2015 NRCGT or FA15 NRCGT and FA 2019 NRCGT or FA19 NRCGT.This guidance note discusses the NRCGT 2019 regime as it applies to individuals disposing of UK property on or after 6 April 2019. For
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