Today the government published Finance Bill 2018-19. The following summary focuses on the proposed changes from April 2019 to the taxation of non-residents UK property gains, with particular focus on the detailed provisions in relation to Collective Investment Vehicles. These include various exemptions/reliefs in response to concerns raised during the consultation process.
Recap on basic rules
As announced at Autumn Budget 2017, and following a consultation, this measure extends the scope of the UK’s taxation of gains accruing to non-UK residents to include all gains on direct and certain indirect disposals of UK property, on or after 6 April 2019.
The indirect disposal rules will apply where a person makes a disposal of an entity, in which it has at least a 25% interest (or any interest in certain collective investment vehicles) where that entity derives 75% or more of its gross asset value from UK land.
The 25% ownership test will look for situations where the person holds at the date of disposal, or has held within 2 years prior to disposal, a 25% or more interest in the property rich company. This holding may be directly, or through a series of other entities, or via connected persons.
