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

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

Think Tax.
Think Tolley.

Critical, comprehensive and up-to-date tax information

TAKE A FREE TRIAL

Popular Articles

Utilising capital losses

Why 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

04 Jan 2022 11:11 | Produced by Tolley Read more Read more

Calculating QIPs

This note provides details on how to calculate quarterly instalment payments (QIPs) for large and very large companies.The instalment amounts are based on the estimated corporation tax liability of the company’s current accounting period. Therefore, this means that large and very large companies

29 Oct 2021 09:01 | Produced by Tolley Read more Read more

Corporate interest restriction ― overview

The corporate interest restriction (CIR) essentially limits the amount of interest expense a company can deduct from its taxable profits if the interest expense is over £2 million. The actual mechanics of the CIR calculation are highly complex (the legislation is over 150 pages long) and are

05 Nov 2021 06:52 | Produced by Tolley Read more Read more