HM Revenue & Customs have issued their revised proposals following responses to the consultation on implementing a Capital Gains Tax charge on non-residents owning residential property in the UK.  The key points arising are as follows:-

The new charge

1. The government has confirmed that a Capital Gains Tax charge on non-residents owning UK residential property will be introduced with effect from April 2015. It will however be restricted to gains arising from April 2015 only.
2. Two methods will be allowed for calculating the proportion of gain arising from April 2015 for properties already owned prior to that date. The methods are:
   1. rebasing to market value April 2015 or
   2. time apportionment over the whole period of ownership.

Principal Private Residence (PPR) election

1. One area of the original consultation which was seen to be controversial was the proposal to remove the option to elect for which of more than one property was the individuals PPR. This was seen as controversial partly because the proposal was to remove the right to elect from everyone and not just non-residents. The new proposals retain the election in place but introduce a new restriction. It will no longer be possible for an individual to elect for a property to be their main residence unless
   1. Either the person making the disposal was resident in the same country as the property for that tax year, or
   2. The person spent at least 90 nights in that property (or across all the persons properties where they have multiple properties in a country in which they are not tax resident) in that year – this is referred to as “the 90 day rule”.

The 90 day rule will apply to existing PPR elections as well as new ones. A property where the election has been made but which doesn’t meet the 90day rule in any year will not qualify as the PPR for that tax year.

Companies

1. The government has confirmed that non-resident companies will be brought within the scope of this charge. The rate of tax applying will be the standard Corporation Tax rate of 20%. There is an exclusion for widely controlled companies and the introduction of a new narrowly controlled company test.
2. The existing Capital Gains Tax (CGT) charge related to the annual tax on enveloped dwellings (ATED) will remain in place and will take precedence over the new charge. To the extent that properties fall within the ATED related CGT charge regime, tax will be charged at 28%. Properties not falling within that regime will instead be taxed at the Corporation Tax rate of 20%.

Reporting and paying

1. Reporting and Paying – any person currently within the self-assessment regime will be able to report any such disposal through their existing self-assessment returns. Anyone else outside of the self-assessment regime will need to report separately within 30 days of the property being conveyed.

For full details please see HMRC website.