Trusts and Inheritance Tax

CGT on non-resident trusts

Produced by Tolley
  • 17 Nov 2021 12:06

The following Trusts and Inheritance Tax guidance note Produced 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
  • UK situated assets in a UK branch or agency
  • Interests in UK land
  • Investments in a property-rich company
  • Rates of tax and the annual exemption
  • Losses
  • Interaction with other CGT provisions
  • More...

CGT on non-resident trusts

Non-residents’ liability for CGT

With effect from 6 April 2019, a person who is not UK resident for a tax year is chargeable to capital gains tax on gains accruing within the year on disposals of assets which are:

  1. 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)

  2. interests in UK land, or

  3. 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)

This is commonly known as the non-resident capital gains tax (NRCGT) regime.

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

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