In his Autumn Statement in December 2013, the Chancellor announced that, from April 2015, the scope of capital gains tax would be extended such that ‘future gains’ on all disposals of UK residential property by non-residents would be subject to the charge.

The Government’s intention is reaffirmed in the Budget but there are no further details on what measures can be expected.  A consultation document is to be published shortly.

Those affected will be all non-resident individuals holding UK residential property and any non-resident non-natural persons holding UK properties valued at £1m or less (as those holding property worth more than £1m will be subject to CGT from 6 April 2015).  It is not yet clear how non-resident trustees holding residential property will be treated.

From April 2015

We have yet to understand the meaning of ‘future gains’ but anticipate that the consultation will include draft measures for the rebasing of acquisition cost to the value at April 2015

The Government predicts that the measure will generate no additional revenues in 2014/15 and 2015/16 and that the additional revenue resulting from the measure will be £15m in 2016/17 and increase incrementally thereafter.  This gives some comfort regarding the rebasing position as it appears that the Government does not anticipate collecting additional revenues until such a time as property values can be expected to have increased materially by comparison with their value at April 2015.  We will need to await the consultation document to see how these rules will interact with the Principal Private Residence Relief.

Source: Deloitte