NON-UK RESIDENTS PROPERTY CAPITAL GAINS TAX
Non-Residents have received some favourable tax breaks in recent years with the most significant being the treatment of Capital Gains Tax when disposing of UK based assets. While most types of disposals made by Non-Residents remain exempt from CGT; this has changed significantly in respect of both residential and commercial property.
Before April 2015, any asset disposed of was entirely exempt from Capital Gains tax for those assessed as being Non-Resident at the time of the asset disposal. The good news is that up until April 2015 the gain is still exempt from tax, and tax is only payable if the asset has further increased in value from April 2015 up until to the date when the residential property is sold.
This means that many overseas investors have benefited from this tax break and pay very little Capital Gains tax. If you ever lived in the property in the past as your main home, there is a chance that we can even reduce your CGT bill to zero by claiming other allowable reliefs.
If you have sold any assets, we can ensure that your capital gain liability is reduced to as low as possible by advising you on all of the allowable expenses that you are entitled to claim. There are lots of expenses from many years ago when you first purchased the asset which you may even have forgotten about but could save you thousands of pounds in tax today. We will guide you and explain the whole process thoroughly so that you have confidence in your tax position.
Regardless of how much tax you may owe to HMRC, we will charge you a fixed fee for your UK Tax Return, which we will quote for you in advance. Our fee for preparing and submitting a capital gains tax return is £385; there is a reduced fee available for the second person if you owned the asset in joint names.
We have prepared a help sheet specifically for those who have disposed of an asset and made a Capital Gain which is liable for tax, so please contact us today to request this help sheet.
OUR PROPERTY CAPITAL GAINS SERVICES
Failure the report the sale within 60 days will attract late filing penalties, and therefore it is best to engage with a tax agent at the same time that you appoint your solicitor. This is sometimes referred to as in-year tax reporting.
Once the tax year has ended, you may also need to complete the standard self-assessment tax return too and detail the disposal again on the Capital Gains section of the tax return.
If you have received any rent from the property for the period 6th April until the date the property sold. The full self assessment tax return will be the chance to report this other source of income.
Once the final tax return has been sent to HMRC, we can request that your tax record is closed down going forward so that HMRC will no longer request tax returns from you.
WHEN YOU SELL A PROPERTY IN THE UK, YOU MUST REPORT THE SALE TO HMRC AND PROVIDE A CALCULATION WITHIN 60 DAYS OF THE CONVEYANCING COMPLETION. YOU MUST ALSO PAY ANY TAX OWED IN THE UK WITHIN THE 60 DAY DEADLINE.
CHANGES ON THE UK PROPERTY HORIZON
In recent years there have been several brazen changes to the UK tax system specifically in respect of UK properties. Some changes came into effect from April 2017 and 2019, and there were yet more changes made with the reduction of two tax reliefs from April 2020 onwards.
From April 2019, non-resident owners of commercial property are now also subject to CGT assessment on the sale of their assets. Ownership of commercial property has gained in popularity in recent years with may overseas owners being marketed specifically to by investment companies offering fixed returns. Student Lets, Hotel rooms, and Residential Care homes providing income from a property-based asset will all now be liable for CGT when you come to sell on your investment.
Changes to Principle Private Residence (PPR) Relief and Lettings Relief
Until recently, there were two generous reliefs available to those who sell a rental property that was formally their primary residence. These are called Principle Private Residence Relief, and Lettings Relief. In all cases where a former home is involved, these two reliefs hugely reduce the amount of Capital Gains tax payable to HMRC on the sale of the property. From April 2020 PPR has been significantly reduced, and the associated Lettings Relief was effectively scrapped for the vast majority of taxpayers.
This is yet another major tax reform that is going to be very costly to Landlords – if you are seriously thinking of selling your former UK home then now would be a great time to consider the impact of this ahead of listing your property for sale. Speak to us today with regards to our Capital Gains forecasting services.
ARE YOU THINKING OF SELLING A PROPERTY?
Selling an asset is always a significant decision, and most likely you will be forward thinking about what you might do with the sale proceeds. At this stage it is always important to consider the impact of any Capital Gains Tax payable as this will directly affect how much is left in your pocket. We can produce an accurate CGT forecast for you on an estimated basis using your anticipated future sale price and date. Tax positions are always best considered in advance as there is often very little planning that can be done retrospectively after a sale. There have also been significant changes that came into effect from April 2020 which will see many individuals CGT bills increase – please read below regarding PPR restrictions.
We can help you understand what your tax position is likely to be, which can help you best make an informed decision. Speak to a Tax Consultant today who will be pleased to answer your CGT queries.
WHY USE A TAX AGENT?
We are professional intermediaries that work for you, not for HMRC. We can discuss a wide range of taxation and your specific areas of concern. We can also discuss scenarios that you are considering and hypothetical situations that make the best use of tax planning.
Using a tax agent removes the general stress and hassle of trying to deal with a process that you may not fully understand or be familiar with. Often dealing with the tax office can be daunting and confusing so we will act as an intermediary and explain everything to you jargon free.
As authorised partners of HMRC, tax agents are specialist companies who are familiar with the UK tax system – we understand what you can and can’t claim for a range of specific situations; we aim to save you a lot of time and money.
At UK Tax Returns we have special agent dedicated phone lines direct to HMRC tax office which are not available to the general public. We are able to talk to HMRC about your tax affairs very quickly at any point, and we can access specialist guidance from technical advisers within HMRC whenever the need arises.
What is the annual exemption for CGT?
If you are entitled to receive personal allowances in the UK then for 2021/22 you can declare capital gains of £12,300 without having to pay any tax to HMRC. This CGT annual exemption is in addition to the income tax free allowance for other income in the UK, such as rental income. Not all nationalities are entitled to receive personal allowances; please contact us for more detailed guidance.
What are the rates of tax for CGT?
For disposals of residential property, the Capital Gains tax rates are 18% and 28%. For other asset classes, such as Commercial property, the lower rates of 10% and 20% will apply.
If I have made a loss do I still need to declare this?
Yes. Whenever you make a disposal of a chargeable asset such as property, you will need to report all of the relevant figures to HMRC by completing a CGT return within 60 days of the sale completing. If you have made a Capital Gains tax loss, you can carry this figure forward each year by completing your self assessment tax return. The loss can stay on your tax account to help reduce any taxable gains that you may make in the future.
NON-UK RESIDENTS PROPERTY CAPITAL GAINS FAQ'S
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