On January 31st, the UK Government published draft legislation for new capital gains taxes on residential property in the UK. The new charge will be levied on UK and non-UK companies and other “non-natural persons” selling UK residential property which is valued at more than £2 million.
The Capital Gains Tax (CGT) charge was announced in March of 2012 along with a new annual residential property tax (ARPT). These changes to the tax regime are meant to ensure that both UK resident and non-UK resident non-natural persons pay a fair share of taxes in regards to the purchase of high value residential properties.
The legislation states that from April 6, 2013, a 28% CGT charge will apply to gains on disposals of properties by UK and non-UK resident companies, partnerships and collective investment schemes if certain conditions are true. The property must by valued at over £2 million when it is disposed of and the ARPT is payable on the property for any day while it was owned.
Increases in the value of property before April 6 2013 will not be subject to CGT, however, corporation tax will apply for UK companies to the part of any gain built up before April 6 2013. The new CGT charge will not apply to disposals of property by non-UK resident trustees.
Source: www.blplaw.com