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Legislation for the annual residential property tax has issued by the government in draft form, following its unveiling in the 2012 Budget.
The document includes additional clauses that were promised in December and clarification of the reliefs intended to exempt genuine commercial activities.
Revised rules to provide equivalent reliefs from the higher rate of stamp duty land tax have also been made available.
Publication of both papers has been accompanied by the announcement – following consultation – of a capital gains tax (CGT) charge on non-resident, non-natural persons who dispose of UK residential property worth more than £2m.
It will apply to gains on disposals on or after 6 April. Increases in the value of property before that date not be subject to CGT under the new measure.
Liability to CGT will be closely aligned with liability to the annual residential property tax on the asset being sold.
The government has decided, for the sake of consistency, that CGT will apply also to non-natural persons who are resident in the UK in respect of gains built up on or after 6 April. Draft legislation contains provisions that include UK resident companies within the scope of the charge.
It provides that corporation tax will apply to the part of any gain built up before 6 April, with the new CGT charge applying only to the gain built up on or after the same date.
Comments on all three sets of rules should be submitted no later than 22 February.
We drafted this summary up for our clients but I am happy to share it here.
Of particular note is page 4 of the pdf which shows a sample calc of how any post April 2013 gain is split between an ARPT-related gain and a non ARPT-related gain - it's not as simple as you might think!
Considering that the non ARPT-related gain is within the "normal" tax regime this could pose some tricky record keeping issues for offshore trustees and service providers re s.13 and s.87 TCGA.
And I am not sure that this wrinkle has been fully absorbed by such service providers. Hence the post.
http://nondom.com/the-extension-of-cgt-to-non-natural-persons